SINGAPORE: Singapore's core inflation in July eased to its slowest pace in more than three years, falling below economists' forecasts.
Core inflation, which excludes private transport and accommodation costs, rose 0.8 per cent in July from a year earlier, data released on Friday (Aug 23) showed. This is the slowest rate since April 2016 and down from the 1.2 per cent increase in June 2019.
The headline consumer price index or overall inflation in July rose 0.4 per cent year-on-year, compared with the 0.6 per cent increase in June.
This was largely due to a fall in the prices of retail and other goods, a larger decline in the cost of electricity and gas, as well as lower services inflation, said the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) in a joint media release.
The cost of retail and other goods fell 1 per cent year-on-year in July, reversing the increase of 0.4 per cent in the previous month.
This mainly reflected a dissipation of the effect of previous increases in water prices, as well as a larger drop in the prices of clothing and footwear, said MAS and MTI.
Electricity and gas costs declined at a steeper 7 per cent compared to the 4.8 per cent drop in June. This was due to a smaller increase in electricity tariffs compared to a year ago, as well as the effect of the open electricity market on electricity prices.
Services inflation dipped to 1.6 per cent year-on-year in July, compared to the 1.7 per cent in June. This was largely on account of a slower pace of increase in holiday expenses and a larger fall in telecommunication services fees, which outweighed a stronger pickup in airfares, said MAS and MTI.
Food costs remained unchanged from the previous month at 1.4 per cent.
The cost of private road transport rose by 0.3 per cent year-on-year in July, slightly higher than the 0.2 per cent from the previous month.
Accommodation costs fell at a slower pace of 0.9 per cent year-on-year in July compared to the 1.1 per cent decline in June, due to a more gradual decline in housing rentals.
The full-year forecast for core inflation is expected to come in within the lower half of the 1 per cent to 2 per cent range, noted MAS and MTI, having previously said it would come in the middle.
"This is further evidence of the weakened condition of the economy," said Steve Cochrane, chief APAC economist at Moody's Analytics.
"This will likely raise expectations of monetary policy easing ... Particularly as many central banks in the region have already begun to ease monetary policy."
MAS said last week, after Singapore slashed its full-year growth forecast, that it was not considering an out-of-cycle policy move.