SINGAPORE’S core inflation, the gauge closely-watched by the central bank, rose to a 14-year high, even after the central bank has tightened policy five times since October 2021.

The measure, which excludes private transport and accommodation, rose 5.5% in January from a year earlier, the fastest pace since November 2008 according to a statement on Feb 23. That compares to a 5.7% median estimate in a Bloomberg survey.

The quickening pace of inflation raises the possibility of the Monetary Authority of Singapore (MAS) further tightening its exchange rate policy at its mid-April meeting. Unlike most other countries, Singapore has adopted the use of the exchange rate rather than the interest rate as the instrument of monetary policy.

Headline inflation edged up higher to 6.6%, compared to a 7.1% median forecast and 6.5% pace in December, partially offset by lower price increases in items like electricity and private transport. Food prices came in higher at 8.1%, the highest level since August 2008, with rising prices in staples like chicken and eggs driving up dining-out options to their highest on record.

Finance Minister Lawrence Wong in his Feb 14 budget speech said he expected headline inflation to remain high for the first half of 2023 and announced an additional S$3 billion (RM9.91 billion) to help lower-income households cope with the higher cost of living.

Feb 23’s report reaffirmed the minister’s comments, adding that inflation will slow “more discernibly in the second half” as the current tightness in the domestic labour market eases and global inflation moderates.

Singapore reiterated its projections for 2023 headline and core inflation, expecting them to average 5.5%-6.5% and 3.5%-4.5% respectively, inclusive of general service tax increases. — Bloomberg / pic TMR File

• This article first appeared in The Malaysian Reserve weekly print edition