(April 25): Core inflation in Singapore accelerated faster than expected to the highest in a decade, in sync with the central bank’s projections that price growth may worsen before it gets better on geopolitical shocks and supply-chain backlogs.

The core consumer price index tracked by the Monetary Authority of Singapore — which excludes private transport and accommodation costs — rose by 2.9% in March, on the back of costlier food and services. That’s the fastest since March 2012 and is showing a quickening for the last eight of nine months.

That compares with the median forecast in a Bloomberg survey for a 2.5% increase, and the 2.2% pace in February.

“External inflationary pressures have intensified amid sharp increases in global commodity prices and renewed supply chain disruptions driven by both the Russia-Ukraine conflict and the regional pandemic situation,” the MAS and the Ministry of Trade and Industry said in a joint statement Monday. “MAS core inflation is forecast to pick up further in the coming months, before moderating towards the end of the year as some of the external inflationary pressures recede.”

The figures come after the central bank’s decision earlier this month to tighten monetary policy for a third time since October as it warned inflation pressures remain a risk in the medium term.

The city-state’s latest consumer price data also follow releases from the US, where inflation is cruising at a 40-year high, and Japan, where costs are picking up at the fastest in two years.

Federal Reserve Chair Jerome Powell has ramped up his hawkish tone, putting the world on guard for a potential 50 basis-point rate increase as early as May and joining a chorus of central bankers mulling “jumbo” rate hikes.

Central banks globally are facing an agonising trade-off between growth and inflation, with risks for many economies that soaring costs, and policy efforts to cool them, can create financial instability and trip up growth, producing a dreaded stagflation scenario.

Singaporean officials have recently been warning that the inflation could be longer-lasting as part of a new economic reality, beyond immediate supply and demand shocks.

Tharman Shanmugaratnam, chairman of the MAS and a senior minister, said at a Boao Forum for Asia event on Friday that “we are dealing with a fundamentally new macroeconomic environment globally”.

Tharman said the new environment requires big spending on new supply capacity, mobilising and “de-risking” private capital to invest in emerging economies, and raising taxes in both advanced and emerging economies.

Singapore’s headline inflation last month rose by 5.4% from a year ago, compared with estimates for a 4.7% increase and February’s 4.3%. Among drivers of the all-items index were transportation costs, which picked up at the fastest pace since 1980.

The MAS and MTI on Monday reiterated estimates that core inflation should be between 2.5% and 3.5% this year, while headline inflation runs within 4.5% and 5.5%.