Singapore’s headline inflation will likely remain volatile over the next few months, due to fluctuation in Certificate of Entitlement prices.

According to economists in the private sector, both headline inflation and core inflation increased in October.

Core inflation will continue to moderate in 2024 as the pressure from import costs declines and the tightness of the labour market at home continues to ease.

Data from the Monetary Authority of Singapore and Ministry of Trade and Industry showed that headline inflation in November was 4.7 percent, up from 4.1 percent recorded in September.

Bloomberg’s poll showed that the latest reading was higher than the median estimate of 4.5 percent by economists in private sector. MTI and MAS attributed higher headline inflation to an increase in private transport prices as well as a rise of core inflation.

The core inflation rate, which excludes private transportation and accommodation, increased to 3.3%. This was just a tad higher than the 3.0% recorded the month before, and well above the median estimate of economists at 3.1%.

MTI and MAS attributed higher core prices for the increase in inflation of services, retail, and other goods as well as an increase in electricity and gasoline costs.

The inflation rate has moderated over the course 2023 but October’s increase kept prices high in comparison to the pre-pandemic level.

Some private-sector economics have revised up their inflation forecasts for 2023 due to the surprise inflation numbers in October.

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The economists are divided on whether or not the central bank will relax policy in 2024.

Economists expect the tightening of monetary policies to reverse in 2024. This could happen as soon as April. However, this may be delayed until the July or October meeting “given that earlier wage increases and higher business costs can take a while to translate into service inflation”.

In their statement, MAS & MTI maintained their previous inflation forecasts. Core inflation is still expected to be around 4% in 2023 and headline inflation will average around 5%.

In 2024, the average headline and core inflation is expected to be between 3 and 4 percent, and 2,5 and 3,5 percent, respectively. Without the impact of the GST increase to 9 percent in January, the projected headline and core inflation is between 2.5 and 3.5 percent, and 1.5 and 2.5 respectively.

Core inflation is expected in December to fall between 2.5% and 3% year-on-year. Core inflation will be affected in early 2024 by both the GST increase and seasonal effects.

Singapore’s inflation may rise more rapidly in the months to come, due to recent geopolitical tensions and the upcoming GST increase, as well as other administrative price increases scheduled for 2024. For example, the 7 percent hike in public transportation fares that will be implemented in December of this year.

In October, the headline inflation rate was 0.2% higher than it was in September, and core inflation rose by 0.4%. In October, inflation rates were higher in most categories.

The rate of private transport inflation increased to 11,7% from 8.5 percent the month before, mainly due to a higher pace of price increases in cars.

The increase in services inflation from September’s 3.1 percent was primarily due to an increased holiday expense.

Retail and other goods inflation increased to 1.6% from 0.9% previously as prices of medical and personal care goods increased more rapidly.

The increase in electricity and gas prices was 1.8 percent, up from 1.4 percent the month before, mainly due to a rise in gas and electric tariffs.

Food inflation, on the other hand, eased from 4.3 to 4.1 percent, with a smaller increase in non-cooked foods and prepared meals.

The rate of housing rent increases has also slowed, bringing down the accommodation inflation to 4.2% from 4.3 percent in September.