SINGAPORE: Singapore’s core inflation eased to 0.6 per cent year-on-year in February, a near four-year low on the back of slower price increases across most categories, official figures showed on Monday (Mar 24).

This is the fifth consecutive drop in the figure. It was below the median forecast of 0.7 per cent in a Reuters poll and January's reading of 0.8 per cent.

The last time core inflation was lower than 0.6 per cent was in March 2021, when it came in at 0.5 per cent.

On a month-on-month basis, core inflation - which excludes accommodation and private transport - increased by 0.1 per cent.

Overall inflation eased to 0.9 per cent year-on-year in February from 1.2 per cent in January, reflecting a moderation in private transport inflation in addition to the fall in core inflation, said the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI).

On a month-on-month basis, overall inflation increased by 0.8 per cent. 

One analyst said the lowest inflation reading in nearly four years meant an easing was possible at the central bank's policy review next month.

There is room to ease monetary policy, said OCBC's head of research and strategy Selena Ling, given MAS' inflation forecast of 1 to 2 per cent this year and the downside risks to growth. 

"The inflationary impact spillover into the rest of the economies outside of the US is still unclear at this juncture given the frequent flip-flops of tariff announcements," she said.

"For now, many central banks may prefer to err on the side of downside growth risks. If MAS chooses to remain static in April, this does not preclude an easing down the road but may just signify a 'wait-and-see' mode at this juncture."

SECTORS 

The drop in February's core inflation was driven by slower price increases across all broad consumer categories other than retail and other goods.

Food inflation moderated from 1.5 per cent in January to 1.0 per cent in February as the pace of price increases for non-cooked food and prepared meals slowed. 

Services inflation also eased, largely due to lower airfares and a steeper decline in holiday expenses, while electricity and gas prices fell more steeply because of a larger drop in electricity prices and a decline in gas prices. 

The cost of retail and other goods fell less steeply, from -0.6 per cent in January to -0.4 per cent in February, due to smaller declines in the prices of clothing, footwear, and furniture and furnishings.

Private transport costs rose at a slower pace from 2.8 per cent in January to 1.6 per cent in February due to smaller increases in car and petrol prices.

Accommodation inflation remained at 1.6 per cent as smaller increases in housing rents were offset by larger increases in housing maintenance and repair costs.

“Singapore’s imported inflation is expected to remain moderate, reflecting favourable supply projections for key food commodity markets and forecasts of a decline in global oil prices,” said MAS and MTI.

“While an escalation of trade frictions could be inflationary for some economies, their impact on Singapore’s import prices is likely to be offset by the disinflationary drags exerted by weaker global demand.”

On the domestic front, the authorities said unit labour costs were projected to rise gradually as nominal wage growth continues to ease, while productivity increases.

“At the same time, enhanced government subsidies for essential services such as public healthcare, preschool education and public transport will continue to dampen services inflation,” they added.