Core inflation rises to 2.7% on higher holiday expenses

Core expenses of households in Singapore picked up in August as inflation in services rose, but overall inflation was still the lowest in more than two years.

- Claire Huang

This has led some analysts to believe officials will hold steady on Singapore's monetary policy in the upcoming October meeting and move to loosen it only in 2025.

Core inflation, which strips out private transport and accommodation costs to better reflect the expenses of households here, rose to 2.7 per cent year on year in August.

It was the first increase in core inflation since February, and comes after the indicator dropped to 2.5 per cent in July, the lowest level in more than two years.

Of all spending categories, services saw the biggest rise in inflation, to 3.3 per cent in August, from 2.9 per cent in July. This came as holiday expenses picked up more strongly, while airfares recorded smaller declines.

Maybank economist Brian Lee attributed most of the rise in holiday expenses inflation in August to package tours.

“Strong travel appetite from Singaporeans may have contributed to this uptick, possibly with bookings ahead of the September and December school holidays,” he said.

Year on year, overall or headline inflation dropped to 2.2 per cent in August from 2.4 per cent in July, driven by a fall in private transport prices. This was the lowest reading since April 2021.