SINGAPORE - After easing in March, core inflation was unchanged in April, held up by pricier holiday expenses and airfares.

Analysts said that behind the stubborn inflation is consumer demand that remains resilient as Singaporeans’ purchasing power is high.

Core consumer prices – which exclude private transport and accommodation costs, and thus reflect the expenses of Singapore households more accurately – rose 5 per cent year on year in April, unchanged from March.

That was higher than the 4.7 per cent forecast in a Bloomberg survey of economists. It is still lower than the 5.5 per cent core inflation recorded in February, which is the highest since November 2008.

April’s core inflation rise came as lower price increases in electricity and gas, food, retail and other goods were offset by higher inflation for travel-related services.

OCBC Bank chief economist Selena Ling is of the view that it will be quite hard for core inflation to ease, mainly because the domestic labour market is still relatively tight and people have spending power.

“While supply chain disruptions have normalised, discretionary items like travel haven’t, as capacity – including flight capacity – hasn’t fully returned to pre-Covid-19 levels, and/or businesses are adopting a ‘pass on the cumulative cost increases’ approach to end consumers to protect profit margins,” she said.

The headline consumer price index, or overall inflation, rose to 5.7 per cent in April on higher inflation for services and private transport, after easing to 5.5 per cent in March. This was higher than the 5.5 per cent prediction in the Bloomberg poll.

Senior economist Alex Holmes of Oxford Economics said the biggest single driver of the jump in April was a certificate of entitlement price-driven rise in transport prices that he said “should prove temporary” and will ease somewhat in May.

Lower global oil prices will also mean lower petrol prices, but the authorities will still be concerned with steep rises in the costs of clothes and footwear, as well as recreation services, he noted.

“Together, these suggest that consumer demand is resilient – something that will likely have to wane for underlying price pressures to ease,” Mr Holmes said.

The official projections for the year remain unchanged at between 5.5 per cent and 6.5 per cent for headline inflation, and between 3.5 per cent and 4.5 per cent for core inflation. These estimates take into account the goods and services tax hike from 7 per cent to 8 per cent from Jan 1.

The Monetary Authority of Singapore and Ministry of Trade and Industry on Tuesday said that upside risks remain, including from fresh shocks to global commodity prices and more persistent-than-expected tightness in the domestic labour market.

They added that there are also downside risks such as a sharper-than-projected downturn in the advanced economies that could induce a general easing of inflationary pressures.

Ms Ling said the higher base in 2022 will favour some disinflation or slow the rate of inflation, but added that the pace of easing inflation is the thing to watch in the second half of the year.

Electricity and gas inflation recorded the steepest decline in April. Their prices rose by 2.7 per cent, much lower than their 12.2 per cent surge in March. This was due to smaller increases in both electricity costs and the gas tariff.

Food inflation dropped to 7.1 per cent in April on the back of slower price hikes in non-cooked food and prepared meals, while inflation for retail and other goods eased to 2.9 per cent as prices rose at a slower pace.

DBS economist Chua Han Teng noted that core inflation in April moderated from the peaks in January and February but has remained elevated, especially in the food category. “Even though global food prices are already falling, food inflation at more than 7 per cent year-on-year is still elevated and has been sticky due to supportive domestic factors, including the impact of the one percentage-point GST hike and wage pressures from a tight labour market.”

Private transport inflation went up the most, jumping 10.4 per cent in April from 8.6 per cent in March, as car prices rose more steeply.

Also on the upward trend was services inflation, which rose to 4.3 per cent in April given the pick-up in airfares and a faster pace of increase in holiday expenses.

Accommodation inflation edged up a notch to 4.9 per cent as a smaller increase in housing rentals was more than offset by a larger rise in the cost of housing maintenance and repairs.