S’pore core inflation rose to 2.1pc in December

SINGAPORE (CNA) – Singapore’s core inflation in December rose to 2.1 per cent on a year-on-year basis, up from the 1.6 per cent reported in November, official data released yesterday showed.

This was driven by an increase in services inflation, mainly due to a steeper increase in airfares which reflected the higher costs of travel on vaccinated travel lanes (VTL), said the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) in a joint media release.

The headline consumer price index, or overall inflation, jumped to four per cent year-on-year in December – up from 3.8 per cent in the previous month.

For the whole of 2021, core inflation came in at 0.9 per cent, up from -0.2 per cent in 2020. CPI-All Items inflation rose to 2.3 per cent, from -0.2 per cent the previous year.

“Given the recent stronger-than-projected inflation out-turns, including the sharp uptick in airfares, MAS and MTI are reviewing the current forecast ranges for CPI-All Items inflation and MAS Core Inflation in 2022,” they said.

People at the Rapid Transit subway station at the Chinatown district in Singapore. PHOTO: AFP

Core inflation excludes accommodation and private transport costs. These items are excluded as they tend to be significantly influenced by supply-side administrative policies and are volatile.

On a year-on-year basis, December’s services inflation rose to 2.6 per cent from November’s 1.9 per cent, driven primarily by a steeper increase in airfares.

“The steeper increase in airfares in December reflected both higher base fares as well as the additional costs of mandatory COVID-19 tests for the newly-introduced VTL flights,” said MAS and MTI.

“Apart from airfares, point-to-point transport services costs, and tuition and other fees also rose at a faster pace,” they added.

Accommodation inflation picked up to three per cent in December, up from 2.7 per cent in November, as housing rents increased more rapidly.