Consumer Price Developments in March 2012
Singapore’s CPI-All Items inflation rose to 5.2% y-o-y in March 2012
CPI-All Items inflation rose from 4.6% in February 2012, on account of a sharper increase in COE premiums which led to higher car prices. Private road transport cost added 1.3% points to CPI-All Items inflation in March, slightly more than twice its contribution in February.
Meanwhile, compared to the increase in February, prices of retail items, such as clothing & footwear, rose more moderately. Services and food inflation remained broadly stable at 3.0% and 2.7% respectively.
Similarly, the increase in CPI less imputed rentals on owner-occupied accommodation (OOA) climbed to 4.1%
Accommodation cost rose by 9.8% y-o-y in March, easing slightly from the 10.2% increase in the preceding month. It has remained the single largest contributor to CPI-All Items inflation. The owner-occupied accommodation (OOA) sub-group, which has a 15.6% weight in the CPI basket, contributed 1.8% points to CPI-All Items inflation in March. This reflected the higher rentals in new and renewed leasing contracts.
Inflation as measured by CPI less imputed rentals on OOA (CPI-ex OOA) was higher at 4.1% in March compared to 3.3% in February, reflecting the stronger rise in car prices.
MAS Core Inflation eased to 2.9% in March
Excluding the costs of accommodation and private road transport, MAS Core Inflation edged down slightly from 3.0% in February to 2.9% in March.
CPI-All Items inflation and MAS Core Inflation will likely remain elevated over the next few months, before easing gradually in H2 2012 CPI-All Items inflation could average around 5% y-o-y in H1 2012 before easing gradually in H2 2012.
Accommodation cost will remain the largest contributor to CPI-All Items inflation this year as leasing contracts continue to be renewed at rentals that are considerably higher than those under existing contracts, especially in the HDB segment. Car prices could also increase if COE premiums rise further in response to the tight COE supply. In addition, wages and other costs will likely continue to pass through to consumer prices, albeit at a more moderate pace. MAS Core Inflation will remain close to 3% in the next few months before easing gradually thereafter.
For the year as a whole, CPI-All Items inflation is now expected to be 3.5-4.5% while MAS Core Inflation will likely be in the range of 2.5-3.0%. Accommodation cost will add more than one-third to CPI-All Items inflation, while car prices and services fees will each account for one-fifth. Another quarter will come from prices of commodity-related items.
MONETARY AUTHORITY OF SINGAPORE
MINISTRY OF TRADE AND INDUSTRY
23 APRIL 2012