Travel services showed higher inflation

The Monetary Authority of Singapore posted a 5% YoY core inflation in April. This is unchanged from the figure in March.

The CPI for items increased to 5.7% YoY in April from 5.5% last month due to higher inflation for private transport and services.

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On a monthly basis, core CPI went up 0.4% in April, following the increase in costs of airfares and holiday expenses.

There was “lower inflation for electricity & gas, food, and retail & other goods but were offset by higher inflation for travel-related services,” said MAS.

Inflation for private transport increased by 10.4% in April, compared to 8.6% in March. Meanwhile, accommodation increased by 4.9% from 4.8% in the same period.

Meanwhile, electricity inflation decreased 2.7% in April, from 12.2% in March.

“Electricity & gas inflation declined due to smaller increases in both electricity costs and the gas tariff,” read the MAS statement.

Although the core inflation was high, global supply frictions and consumer goods inflation eased.

“Businesses are expected to continue to pass through accumulated labour costs to consumer prices, albeit at a more moderate pace amid the slowdown in domestic economic activity,” MAS stated.

According to MAS, core inflation in the next few months will still be elevated. However, it is set to slow down in H2 2023.

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“Meanwhile, with the increase in COE quota and ramp-up in the supply of housing units available for rental, private transport, and accommodation inflation is expected to moderate over the year.”

The full-year outlook is that headline and core inflation will average 5.5% to 6.5% and 3.5% to 4.5%.

But “excluding the transitory effects of the 1%-point increase in the GST to 8%, headline, and core inflation are expected to come in at 4.5 to 5.5% and 2.5 to 3.5%, respectively.”

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