Singapore core CPI accelerates to fastest since 2008

SINGAPORE’S key inflation gauge accelerated for a third month to the fastest in almost 14 years, bolstering the case for stronger action to buffer consumers from the drag of rising prices.

The central bank’s closely watched core inflation gauge, which excludes private transport and accommodation, rose by 3.6% from a year ago in May, according to a joint statement Thursday from the Monetary Authority of Singapore and the Ministry of Trade and Industry. That pace, the fastest since December 2008, matches the median estimate in a Bloomberg survey, and compares to 3.3% in April.

The increase was due to stronger inflation “across the broad” categories of food, services, retail goods and energy, they said in the statement. They also repeated a similar warning from last month that prices will pick up in the coming months before easing toward the end of the year as external pressures recede, while flagging upside risk from geopolitical or pandemic-related snags.

The MTI and MAS reiterated their forecasts for its main price measures this year, seeing core at 2.5% to 3.5%, and the broader all-items gauge at 4.5% to 5.5%.

The city-state’s faster inflation underscores the challenge facing policymakers across the region to buffer vulnerable households and businesses still recovering from the pandemic.

In addition to sustained supply chain snags, Covid-related lockdowns in China and commodities pressured by Russia’s invasion of Ukraine, Asian currencies have been sliding as the Federal Reserve aggressively tightens policy, adding further inflation risks.

The MAS, which uses foreign exchange rather than interest rates to set policy, has tightened settings three times in the last eight months, including a surprise move in January. As well, the government unveiled a S$1.5 billion ($1.1 billion) support package on Tuesday to shield lower-income residents from the impacts of higher costs.

A majority of Singaporeans in a survey released this week by DBS Group Holdings Ltd. said they expect inflation pressures to continue for the next year. As well, more than half of Singaporeans think the government is handling inflation “badly,” according to a mid-May survey by Blackbox Research Pte.

The all-items consumer price index gained 5.6%, compared with a median estimate of 5.5% in a Bloomberg survey, and 5.4% the previous month. That’s the fastest since November 2011. — Bloomberg / pic TMR FILE