In June, Singapore’s core inflation rate decreased to 2.9% year-on-year, marking a significant drop and the lowest level in over two years. This decline from May’s 3.1% was slightly below economists’ forecast of 3.0%.
Factors contributing to the decrease included lower inflation in retail and other goods, as well as services. Overall inflation dropped to 2.4% year-on-year, down from 3.1% in May, largely due to reduced costs in private transport, including car and motorcycle prices.
Services inflation also eased, attributed to slower increases in hospital and holiday expenses. Housing and food inflation remained relatively stable.
Looking ahead, Singapore expects moderated inflation, supported by stable global energy and food prices, and a strengthening Singapore dollar.
Forecast range for CPI-All Items inflation
“The forecast range for CPI-All Items inflation is being reviewed and will be updated in MAS’ July 2024 Monetary Policy Statement,” said MAS and MTI.
Risks to the inflation outlook remain, as fresh geopolitical shocks, adverse weather events and renewed transportation disruptions around the world could put “upward pressure” on global energy and food commodity prices, as well as shipping costs, they add.
“Domestically, a stronger-than-expected labour market could lead to a re-acceleration of wage growth. Conversely, an unexpected weakening in the global economy could induce a greater easing of cost and price pressure.”