Download → Consumer Price Developments in May 2023

Summary

• MAS Core Inflation fell to 4.7% on a year-on-year (y-o-y) basis in May, from 5.0% in April.

o This was mainly driven by a decline in inflation for services and food.

• CPI-All Items inflation eased to 5.1% y-o-y in May, from 5.7% in April.

o This largely reflected a fall in private transport inflation, in addition to lower core inflation.

• On a month-on-month (m-o-m) basis, core CPI edged up by 0.1% in May, mainly due to higher food prices. CPI-All Items rose by 0.3% over the same period on the back of an increase in accommodation costs alongside the rise in core CPI.

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 fell to 5.1% y-o-y in May.

CPI-All Items inflation eased, mainly on account of lower inflation for private transport, services and food.

Private transport inflation declined as car prices rose at a slower pace and petrol prices saw a sharper fall.

Services inflation moderated on the back of smaller increases in holiday expenses and pointto-point transport services costs

Food inflation eased due to lower inflation for food services.

Accommodation inflation dipped as housing rents rose at a slower pace.

Inflation for retail & other goods edged down as the prices of clothing & footwear and household durables recorded smaller increases.

Electricity & gas inflation rose due to a larger increase in electricity costs.

Outlook

Global supply chain frictions and consumer goods inflation in the advanced economies have continued to ease. Global energy and food commodity prices have also moderated further. As a result, prices of Singapore’s imported goods have continued to decline on year-on-year terms.

On the domestic front, unit labour costs are expected to rise further in the near term. At the same time, businesses are expected to continue passing through higher labour costs to consumer prices, albeit at a more moderate pace amid the slowdown in domestic economic activity.

Taking into account all factors, MAS Core Inflation is expected to moderate further in H2 2023 as imported costs are reduced and the current tightness in the domestic labour market eases.

Meanwhile, with the increase in COE quota and ramp-up in the supply of housing units available for rental, private transport and accommodation inflation are expected to moderate over the course of the year.

For 2023 as a whole, headline and core inflation are projected to average 5.5–6.5% and 3.5– 4.5%, respectively. Excluding the transitory effects of the 1%-point increase in the GST to 8%, headline and core inflation are expected to come in at 4.5–5.5% and 2.5–3.5%, respectively. Upside risks remain, including from fresh shocks to global commodity prices and more persistent-than-expected tightness in the domestic labour market. At the same time, there are also downside risks such as a sharper-than-projected downturn in the advanced economies which could induce a general easing of inflationary pressures.