How inflation has affected the prices of food items

Such prices have climbed every month on a year-on-year basis, and might inch up further

- Prisca Ang

The spectre of rising inflation looms large as global economies bounce back from the troughs of the Covid-19 pandemic and the supply chain crunch wears on.

Singapore has not been spared, with inflation hitting an eight-year peak in October – 3.2 per cent on a year-on-year basis – partly due to costlier cars and higher housing rents. Core inflation, which excludes rents and private road transport costs, climbed to 1.5 per cent – its highest in nearly three years.

This number better captures the underlying trend in consumer prices and is the measure the Monetary Authority of Singapore (MAS) monitors most closely.

Inflation is not necessarily bad; a moderate amount generally reflects healthy economic growth. But persistently high levels of inflation can weaken consumer purchasing power and cut margins for businesses by depriving them of their pricing power.

Core inflation was buoyed in October by rising services and food prices and a smaller decline in the cost of retail and other goods.

Services costs rose at a faster pace due to pricier airfares and holiday expenses as border restrictions eased, while food inflation edged up as non-cooked food became more expensive.

Food prices have continued to climb every month on a year-onyear basis, even as core inflation was negative from February last year to January.

UOB economist Barnabas Gan said food prices are likely to inch up further if the Omicron variant triggers more supply chain disruptions.

“It might be somewhat similar to last year when Covid-19 was fresh in the picture. Back then, borders were closed and, as a result, the prices of necessities, including food, were on the uptrend,” he said.