Singapore’s core inflation dipped to 3.2% year-on-year in November, marking a welcome respite from the recent highs. This encouraging trend, driven by lower costs for retail goods, food, and energy, offers a glimmer of hope for Singaporeans grappling with rising prices.

Key Takeaways:

• Core inflation, excluding volatile components like accommodation and private transport, fell from 3.3% in October to 3.2% in November.
• Overall inflation also declined, dropping from 4.7% to 3.6% year-on-year.
• The decrease is attributed to lower prices for retail goods, food, electricity, and gas.
• Services inflation edged up slightly, due to rising costs for outpatient services, recreation, and telecommunications.
• Private transport inflation saw a significant drop, thanks to a slower pace of increase in car prices.

Breaking Down the Numbers:

The November inflation data paints a nuanced picture of Singapore’s price pressures. While core inflation remains elevated compared to pre-pandemic levels, the downward trend is a positive development. This is largely driven by easing global commodity prices and a strengthening Singapore dollar.

• Retail and Other Goods: Inflation in this category fell to 1% in November, reflecting lower prices for medical goods, household durables, and personal care products.
• Food: Food inflation eased to 4.0%, with prepared meals showing a slower pace of increase.
• Electricity and Gas: Costs in this category edged down to 1.5%, due to a smaller rise in electricity prices.
• Services: Services inflation inched up to 3.5%, driven by higher costs for outpatient services, recreation, and telecommunications. However, airfares declined at a faster pace.
• Private Transport: Private transport inflation saw a significant drop from 11.7% in October to 4.2% in November, primarily due to a slower increase in car prices.
• Accommodation: Accommodation inflation dipped to 4.1%, as the pace of increase in housing rents moderated.

Future Outlook: Watten House Showroom

The Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) project core inflation to remain around current levels in the near term, before moderating further in 2024. This forecast is based on several factors, including:

• Global oil prices: Recent volatility in oil prices is expected to dampen import costs in the coming months.
• Food and manufactured goods: Prices of most food commodities and manufactured goods are expected to continue declining.
• Stronger Singapore dollar: The Singapore dollar’s appreciation against major currencies should further ease import pressures.
• Slower labor cost increases: Gradual cooling in the labor market is expected to moderate unit labor costs.

Potential Risks:

Despite the positive outlook, some upside risks remain:

• Geopolitical conflicts: Fresh shocks to global energy and food prices due to geopolitical conflicts could disrupt the projected easing of inflation.
• Domestic labor market: More persistent tightness in the domestic labor market than anticipated could lead to higher wage pressures and inflationary spikes.

Conclusion:

Singapore’s core inflation easing to 3.2% in November is a welcome development, offering a glimmer of hope for consumers facing rising prices. While some upside risks remain, the overall outlook suggests a gradual moderation of inflation in the coming months. Continued vigilance from policymakers and proactive measures to address cost pressures will be crucial in ensuring price stability and sustainable economic growth.