ANN/THE STRAITS TIMES – Singapore’s core inflation declined for the fifth straight month in February after falling sharply in January as most spending categories saw smaller year-on-year price increases.
Prices also fell for two categories – electricity and gas, and retail and other goods – the Monetary Authority of Singapore (MAS) and Ministry of Trade and Industry (MTI) said in their joint report yesterday.
Economists said Singapore inflation will continue to ease in the months ahead, with a chance that overall consumer prices might even drop if the global economy takes a sharp turn downward.
For February, core inflation, which excludes private transport and accommodation costs to better reflect the expenses of households here, eased to 0.6 per cent year on year.
This is the lowest since June 2021 when it was 0.6 per cent, and much lower than the 3.6 per cent rate recorded in February 2024. It is also below the 0.7 per cent forecast by economists in a Bloomberg poll.
In January, core inflation slid to 0.8 per cent from 1.7 per cent in December. Starting with January, the consumer price index (CPI) has been rebased to a base year of 2024 from 2019. Rebasing is conducted once every five years to reflect the latest consumption patterns of Singapore households.
After considering the weighting changes in the rebased CPI, Maybank economist Brian Lee concluded that the sharp fall in January-February core inflation could not be attributed to the rebasement.
Overall – or headline – inflation cooled to 0.9 per cent year on year in February from 1.2 per cent in January as private transport inflation moderated, in addition to the fall in core inflation. It also came in lower than the Bloomberg poll forecast of 1.0 per cent.
MAS and MTI said Singapore’s imported inflation is expected to remain moderate, reflecting favourable supply projections for key food commodity markets and forecasts of a decline in global oil prices.
“While an escalation of trade frictions could be inflationary for some economies, their impact on Singapore’s import prices is likely to be offset by the disinflationary drags exerted by weaker global demand,” they said.
But MAS and MTI also warned that the inflation outlook “remains subject to heightened uncertainties in the external environment”.
DBS Bank senior economist Chua Han Teng and UOB associate economist Jester Koh cautioned that an escalating global trade war could result in weaker global demand, putting downward pressure on Singapore inflation.
