Higher services and food costs, partly from Chinese New Year, drive inflation rise
Singapore’s inflation exceeded expectations in February, with both core and headline inflation rising more than anticipated. Headline inflation reached 3.4% year-on-year, up from January’s 2.9%, surpassing economists’ median forecast of 3.2%. Core inflation, which excludes accommodation and private transport, climbed to 3.6%, accelerating from January’s 3.1%, and also exceeding the 3.4% forecast.
The rise in inflation was attributed to higher services and food costs, influenced by seasonal factors related to the Chinese New Year. Specifically, accommodation inflation rose to 3.9%, from 2.1% in January, and services inflation surged to 4.2%, driven by increased airfares and holiday-related expenses.
On a month-on-month basis, headline inflation rose by 1%, while core inflation grew by 0.5%. Despite the higher inflation readings, the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) maintained their full-year inflation forecasts, with both headline and core inflation expected to average between 2.5% and 3.5%. Excluding the impact of the goods and services tax hike, inflation is projected to be between 1.5% and 2.5%.
