Consumer Price Developments in September 2022
Summary
• MAS Core Inflation rose to 5.3% on a year-on-year (y-o-y) basis in September, from 5.1% in August. o The pickup in core inflation was on account of larger increases in the prices of food, services and retail & other goods.
• CPI-All Items inflation was 7.5% y-o-y in September, unchanged from that in August. o Headline inflation remained the same as higher core and accommodation inflation were offset by lower private transport inflation.
• On a month-on-month (m-o-m) basis, core CPI and CPI-All Items increased by 0.5% and 0.4% respectively.
Chart 1: MAS Core and CPI-All Items Inflation
Chart 2: % Point Contribution to Year-on-year CPI-All Items Inflation
* Private transport and accommodation are excluded from the MAS Core Inflation measure. Source: MAS, MTI estimates
CPI-All Items inflation was unchanged at 7.5% y-o-y in September.
CPI-All Items inflation remained the same as that in August, as lower private transport inflation was offset by higher inflation for food, accommodation, services and retail & other goods
Food inflation picked up as the prices of both food services and non-cooked food rose at a faster pace.
Accommodation inflation rose alongside a faster pace of increase in housing rents.
Services inflation came in higher on account of larger increases in the cost of point-to-point transport services and holiday expenses.1 At the same time, telecommunication services fees recorded a smaller decline
Retail & other goods inflation edged up, mainly due to a faster pace of increase in the prices of telecommunication equipment, medicines & health products and other personal care products
Electricity & gas inflation was unchanged from that in August.
Private transport inflation moderated due to a slower pace of increase in car and petrol prices.
Outlook Globally, demand conditions in major economies have softened while supply chain frictions have continued to ease. Prices of energy and food commodities have come off their peaks from earlier in the year, but remain high given ongoing supply constraints. In addition, labour markets in major advanced economies are still tight, keeping wage pressures strong. Accordingly, across a range of goods and services, Singapore’s imported inflation is expected to remain significant for some time. On the domestic front, unit labour costs will increase further in the near term alongside robust wage growth. At the same time, the cost of utilities is likely to remain elevated. Firms are expected to continue to pass through accumulated import, labour and other business costs to consumer prices amid resilient demand. Car and accommodation cost increases are also anticipated to stay firm in the quarters ahead amid tight COE quotas for cars and strong demand for rental housing respectively. MAS Core Inflation is projected to stay elevated in the next few quarters before slowing more discernibly in H2 2023 asthe current tightness in the domestic labour market eases and global inflation moderates. For 2022 as a whole, CPI-All Items inflation is expected to average around 6.0%, and MAS Core Inflation around 4.0%. In 2023, taking into account all factors including the GST increase, headline and core inflation are projected to average 5.5–6.5% and 3.5–4.5% respectively. Excluding the transitory effects of the GST hike, headline and core inflation are expected to come in at 4.5–5.5% and 2.5–3.5% respectively. There are upside risks to the inflation outlook, including from fresh shocks to global commodity prices and more persistent-than-expected external inflation. MONETARY AUTHORITY OF SINGAPORE MINISTRY OF TRADE AND INDUSTRY 25 October 2022
Annex: Price Indicators CPI – All Items The CPI is commonly used as a measure of consumer price changes in the economy. It tracks the change in prices of a fixed basket of consumption goods and services commonly purchased by the general resident households over time. The CPI covers only consumption expenditure incurred by resident households. It excludes non-consumption expenditures such as purchases of houses, shares and other financial assets and income taxes etc. The CPI – All Items provides a comprehensive overview of the prices of consumer goods and services. Nevertheless, useful information can also be revealed by complementary CPI series derived by excluding specific items in the All Items basket. For example, two other CPI series reported on a monthly basis are the CPI less imputed rentals on owner-occupied accommodation and the MAS Core Inflation.
MAS Core Inflation The Monetary Authority of Singapore (MAS) monitors a core inflation measure that excludes the components of “Accommodation” and “Private Transport”. These items are excluded as they tend to be significantly influenced by supply-side administrative policies and are volatile. Core inflation is meant to capture the generalised and persistent price changes that are driven by underlying demand conditions. It thus provides useful information for monetary policy which has the objective of ensuring price stability in the medium term. CPI less imputed rentals on owner-occupied accommodation Accommodation, one of the groups in the Housing & Utilities category of the CPI, comprises “rented and owner-occupied accommodation”, as well as “housing maintenance & repairs”. A significant share of the Accommodation group is “owner-occupied accommodation (OOA)” cost, which is meant to reflect the costs to homeowners of utilising the flow of services provided by their homes over an extended period of time. As the cost of using housing services is not directly observed for homeowners, it is proxied by market rentals. Changes in the CPI imputed rentals on OOA, however, have no direct impact on the monthly cash expenditure of most households in Singapore as they already own their homes. Hence, the CPI less imputed rentals on OOA is compiled as an additional indicator to track households’ actual expenditures. Actual rentals paid on rented homes are still included in this measure.
CPI Statistics
Detailed CPI statistics can be found in the Department of Statistics’ release titled “Singapore
Consumer Price Index for September 2022”. This release also contains further information on
the various price indicators published.
https://www.singstat.gov.sg/whats-new/latest-news/cpi-highlights
MAS Core Inflation A detailed review of MAS Core Inflation can be found in “A Review of the Core Inflation Measure for Singapore”. https://www.mas.gov.sg/- /media/MAS/resource/publications/staff_papers/StaffPaperNo51.pd |
Table A.1 Consumer Price Index of Key Categories Index (2019=100)
Note: For more information on the CPI items in the “Services” and “Retail & Other Goods” categories in this report, please refer to “MAS Core Inflation and Notes to Selected CPI Categories”. https://www.mas.gov.sg/statistics
Table A.2 YOY Inflation for Key CPI Categories
1.A portion of the holiday expenses CPI remained imputed in September as travel restrictions in some countries were still in place. For more details, please refer to the Technical Note in the Department of Statistics’ release titled “Singapore Consumer Price Index for September 2022”.
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