Singapore’s core inflation rate increased by 0.5% month-on-month in April, reversing a 0.1% decline in March, according to a report by UOB Global Economics and Markets Research. The year-on-year figure also rose to 0.7%, surpassing both market expectations and UOB’s forecast of a stable 0.5% rate. This uptick was primarily attributed to higher non-cooked food prices and a significant rise in health insurance premiums, linked to the phased increase in MediShield Life premiums.
The recent rebasing of the Consumer Price Index (CPI) has amplified the impact of rising insurance premiums, with the weight of health insurance in the 2024-based CPI nearly tripling compared to 2019. This change has had a pronounced effect on the core inflation reading. Within the non-cooked food category, notable price increases were observed in canned and fresh fruits, meat, and rice.
Despite these pressures, overall price increases remain contained, with several CPI categories, such as clothing and footwear, experiencing year-on-year declines. A notable exception was a 10% hike in water prices, which contributed to a rise in utilities and other fuels.
UOB maintains its full-year 2025 core inflation forecast at 0.7%, with potential downside risks due to weaker external demand and possible excess supply from China. The report suggests that the Monetary Authority of Singapore (MAS) may further ease monetary policy in July by flattening the Singapore dollar nominal effective exchange rate (S$NEER) slope to zero percent appreciation, given the current economic outlook.
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