Singapore’s headline and core inflation rates experienced a more significant decline than expected in June, with headline inflation dropping to a three-year low of 2.4%, as reported by the Department of Statistics on July 23, 2024. This figure was notably lower than the median forecast of 2.7% provided by private-sector economists.

The decrease in inflation is attributed primarily to a reduction in private transport costs, alongside a broader decline in core inflation. In June, core inflation, which excludes accommodation and private transport costs, stood at 2.9%, down from 3.1% in May and below the economists’ median estimate of 3%.

On a month-over-month basis, the overall consumer price index (CPI) fell by 0.2%, while the core CPI remained unchanged. As a result of these changes, the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) announced that they are reviewing their full-year inflation forecasts. These updates will be included in MAS’s upcoming monetary policy statement, expected no later than July 31.

Currently, both headline and core inflation are anticipated to average between 2.5% and 3.5% for the full year. Excluding the temporary effects of the goods and services tax hike, forecasts suggest headline and core inflation will range from 1.5% to 2.5%.

In June, most broad categories of the consumer price index reflected lower inflation rates, while some remained stable. Specifically, private transport costs declined by 0.7%, influenced by falling prices for cars and motorcycles, as well as a slower increase in petrol prices.

Accommodation inflation also decreased slightly to 3.3% from 3.4% in May, with rental prices rising at a more modest rate. Among the core inflation components, retail and other goods saw the most substantial reduction, dropping to 0.5% from 1.5%. Services inflation moderated to 3.4%, down from 3.6%, as costs for hospital services and holiday expenses increased at a slower pace.

Food costs remained steady at 2.8%, indicating stable inflation in food services, while electricity and gas inflation remained unchanged at 6.9%, with prices rising at a consistent rate.