Inflation in February increased to 4.3 percent.
In February, price pressures remained robust, with headline inflation increasing to 4.3 percent, barely above market estimates of 4.2 percent. The increase in headline inflation was fueled in major part by the 14.8% increase in transportation costs and, to a lesser extent, by rising healthcare costs. To some extent, the price increases were offset by lower inflation for food (2.3 percent vs. 2.6 percent previously), recreation, and education. Core inflation, on the other hand, which excludes private transportation and housing prices, fell below the consensus prediction to finish at 2.0 percent, down from 2.2 percent earlier. Core inflation is the price index that the Monetary Authority of Singapore (MAS) uses to make policy decisions. Meanwhile, inflation was 4.6 percent for all products except housing.
Developing pricing pressures to compel MAS to respond more aggressively
Despite the decline in core inflation, we may anticipate further pricing pressures in the coming months as a result of the ongoing conflict in Ukraine. Commodity price increases across the board will trickle down to consumer pricing in Singapore, as everything from food to transportation costs becomes more expensive. MAS predicts core inflation would finally reach 3% by mid-year, maybe as early as May. With the impact of these recent events expected to become apparent in March, we may need to brace ourselves for near-term higher inflation. With prospects for higher inflation in the future, we fully anticipate the MAS to tighten further at its forthcoming April meeting.
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