By Last January (11 Jan 2022), Minister of State for Trade and Industry Low Yen Ling told Parliament that Singapore did not expect persistent, accelerating inflation ahead, and cost pressures were expected to ease gradually over the course of the year.
“While household inflation expectations have risen slightly, they remain well-anchored. In particular, household expectations of inflation have remained below historical averages. Hence, MAS (Monetary Authority of Singapore) and MTI (Ministry of Trade and Industry) do not expect persistent, accelerating inflation,” she said.
Singapore’s headline inflation rose to 3.8 per cent in November 2021, while core inflation which excludes accommodation and private road transport costs, came in at 1.6 per cent the same month.
Singapore’s core inflation was expected to increase in the first half of 2022, before easing in the latter part of the year, she added. She assured everyone that the PAP government is sparing no effort to lessen the inflation impact on Singaporeans.
However, one year later, according to the latest inflation data released on Wednesday (25 Jan 2023), Singapore’s inflation remains stubbornly high.
Core Inflation now came in at 5.1 per cent on a year-on-year basis in December, unchanged from November.
On a month-on-month basis, Core CPI increased by 0.6 per cent while CPI-All Items rose by 0.2 per cent.
For 2022 as a whole, Singapore’s Core Inflation averaged 4.1 per cent, higher than the 0.9 per cent recorded in 2021. Over the same period, CPI-All Items inflation came in at 6.1 per cent, up from 2.3 per cent in 2021.
“These are big increases and they are not likely to significantly reverse any time soon,” even noted by ST Editorial.
MAS and MTI: Core CPI projected to stay high in first half this year
After the release of the latest December inflation data, many economists remain pessimistic and say that the latest data shows that taming core inflation will remain challenging for Singapore this year, especially with the Goods & Service Tax (GST) hike factored in.
OCBC chief economist Selena Ling said core inflation will remain challenging in 2023, “maybe because of domestic price pressure points”. These include the recent GST hike implemented by the PAP government.
“For the man in the street, while they have received additional assistance through the GST Assurance Package and the recent $300 in CDC (Community Development Council) vouchers per household, elevated inflation remains the pressing issue of the day,” said Ms Ling.
UOB senior economist Alvin Liew thinks the stubborn core inflation means that inflation risks will remain on the upside.
Meanwhile, MAS and MTI now said that core inflation is projected to stay high in the first half of 2023, “MAS Core Inflation is projected to stay elevated in the first half of this year before slowing more discernibly in H2 2023 as the current tightness in the domestic labour market eases and global inflation moderates.”