Inflation slows down more than expected, thanks to easing accommodation, transport costs, and softer food inflation
Singapore’s inflation for January 2024 eased more than anticipated, despite the Goods and Services Tax (GST) hike to 9%. Headline inflation slowed to 2.9% from 3.7% in December, marking its slowest growth since the third quarter of 2021. This was better than the median forecast of 3.8%, with contributing factors being lower accommodation and private transport prices, as well as softer core inflation.
Core inflation, which excludes accommodation and private transport, fell to 3.1%, down from 3.3% in December and below economists’ median estimate of 3.6%. The decline was driven by lower inflation in services and food, even with the GST hike effect.
For 2024, authorities expect both headline and core inflation to average between 2.5% and 3.5%. Excluding the GST hike’s temporary effects, inflation is forecast to be between 1.5% and 2.5%. Despite the January dip, core inflation is expected to rise in February due to the “Chinese New Year effect” but should ease in the latter part of the year due to manageable global commodity prices and the strong Singapore dollar.
Economists, like Barclays’ Brian Tan, have adjusted their full-year inflation forecasts, expecting a slight reduction in core inflation to 3% and headline inflation to 2.2%.
