Singapore’s headline inflation up 0.8% in April

Consumer prices in Singapore gained 0.8% from a year ago for the month of April, accelerating from its pace of increase from the previous month, a joint statement from the Monetary Authority of Singapore (MAS) and Ministry of Trade and Industry (MTI) released on Thursday showed.

Consumer Price Index (CPI), also known as headline inflation, edged up from March’s 0.6% increase due to a rise in private road transport costs.

Singapore’s core inflation, an indicator which excludes accommodation and private road transport costs, eased from the previous month’s 1.4% increase to gain by 1.3%.

Core inflation to come in near the mid-point of 1%-2% forecast

Commenting on Singapore inflation outlook, MAS and MTI said the external sources of inflation are likely to be benign for the rest of 2019. Even though global oil prices have risen in recent months, they are not expected to exceed last year’s average on a whole. Meanwhile, global food prices are expected to only pick up slightly on average.

‘An acceleration in inflationary pressures is unlikely against the backdrop of slower Gross Domestic Product (GDP) growth, uncertainties in the global economy, as well as the continuing restraining effects of MAS’ monetary policy tightening in 2018,’ MAS and MTI said, reiterating the same comments it had voiced a month ago.

The MAS and MTI projects headline inflation for this year to be at around 0.5%-1.5% while core inflation is likely to come in near the mid-point of the 1.0%-2.0% forecast.

Oil prices rose to multi-week highs on Monday after the Organization of the Petroleum Exporting Countries (OPEC) said that it is considering keeping its output cuts.

Year-to-date, oil prices have risen by around 40%, led by output cuts from OPEC and allied producers including Russia and the United States sanctions on Venezuela and Iran.

The trickle-down effect from the recent higher oil prices require some time before passing through to the prices of goods, hence if MAS and MTI were to make any revisions to the inflation numbers to reflect the recent surge in oil prices, the changes would most likely come around the second quarter of this year, predicts IG market strategist Pan Jingyi.

Food prices eased 1.3% while private road transport costs gained 1.1%

For last month, electricity and gas fees fell by 2.8%, reversing from the 3.9% increase in March, due to lower electricity tariffs and the dampening effect on electricity prices from the phased nationwide launch of the open electricity market.

Food prices eased to 1.3% for last month, from 1.6% in the previous month, as prices of non-cooked food items and prepared meals increased at a slower pace.

Prices of retail items edged up by 0.2%, slightly higher than the 0.1% increase in the previous month, as a fall in prices of clothing and footwear items were offset by price increases in personal care products and household durables.

Accommodation costs fell by 1.4% for last month, in the same pace of decline in March, as a smaller increase in housing maintenance and repairs costs offset a more gradual decline in housing rentals.

Private road transport costs rose by 1.1%, reversing from the 0.9% decline in March. Higher car prices and a stronger pick up in petrol prices led to the increase in prices for this segment.