Singapore Economy Inflation Driven by Chinese New year Spending

Singapore's core inflation surged to 3.6 percent year-on-year in February, marking its highest level since July 2023. This increase, up from January's 3.1 percent, surpassed economists' forecasts of 3.4 percent, driven primarily by elevated services and food inflation associated with Chinese New Year spending. The Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) highlighted these factors in a statement on Monday.

Core inflation, which excludes private road transport and accommodation costs, reached its highest point since July 2023, when it stood at 3.8 percent. Overall or headline inflation also saw an uptick to 3.4 percent year-on-year in February from 2.9 percent in January, primarily due to increased accommodation costs. Accommodation inflation climbed to 3.9 percent, up from 2.1 percent in January, as additional Service & Conservancy Charges (S&CC) rebates disbursed in January were not repeated in February.

Services inflation rose to 4.2 percent in February from 3.3 percent in January, driven by higher airfares and a notable increase in holiday expenses. Similarly, food inflation increased to 3.8 percent compared to 3.3 percent in January, with prices of both cooked and non-cooked food rising at a faster pace.

However, there were some areas of moderation. Electricity and gas inflation dipped to 5.3 percent due to a slower increase in electricity costs, while private transport inflation decreased from 2.9 percent in January to 1.4 percent in February, attributed to a slower rate of increase in car prices, reflecting lower COE premiums.