Singapore’s core inflation eases to 1.4% in March

Singapore’s core inflation eases to 1.4% in March

SINGAPORE: Singapore’s core inflation eased to 1.4 per cent year-on-year in March from 1.5 per cent the previous month, according to figures released on Tuesday (Apr 23).

Smaller increases in the prices of retail items and electricity and gas more than offset the rise in services and food inflation, said the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) in a press release.

Consumer Price Index (CPI)-All Items also rose at a faster pace of 0.6 per cent in March compared with 0.5 per cent in February. Smaller declines in private road transport and accommodation costs year-on-year contributed to this, the release said.

The overall cost of retail items inched up by 0.1 per cent year-on-year in March, down from the 1.1 per cent increase in February. This is due to a decline in the cost of household durables, in addition to smaller increases in the prices of clothing, footwear and personal care products.

The effect of the higher tobacco excise duty introduced in February 2018 also dissipated in March this year, the release said.

The increase in electricity and gas costs also fell from the previous month’s 5.5 per cent to 3.9 per cent year-on-year in March. According to the release, this reflected the "dampening effect" of the phased nationwide launch of the Open Electricity Market (OEM) on electricity prices.

Meanwhile, food inflation prices had a slight uptick to 1.6 per cent in March from 1.4 per cent in February, due to a faster pace of increase in the prices of prepared meals and non-cooked food items. 

Higher inflation for holiday expenses and a smaller decline in telecommunication services fees contributed to a rise in services inflation, which went up to 1.7 per cent in March from 1.5 per cent the previous month.

A more gradual decline in car prices and a rise in petrol prices contributed to a smaller decrease in transport costs at 0.9 per cent. The previous month recorded a 2.3 per cent drop.

The 1.4 per cent decrease in accommodation costs was less than the 1.6 per cent recorded the previous month. This comes as the decline in housing rentals eased, according to the release, though owner-occupied accommodation experienced a slight rise to 1.1 per cent in March.

External sources of inflation in 2019 are “likely to be benign, as global oil prices are expected to come in lower for the year as a whole than in 2018, while food prices should only pick up slightly on average”, said MAS and MTI.

“On the domestic front, labour market conditions remain firm and will support moderate wage increases, such that unit labour costs should continue to rise,” they said. 

“However, an acceleration in inflationary pressures is unlikely against the backdrop of slower GDP growth, uncertainties in the global economy, as well as the continuing restraining effects of MAS’ monetary policy tightening in 2018.”

The authorities also revised the forecast for MAS Core Inflation to 1 per cent to 2 per cent in 2019, from the previous 1.5 per cent to 2.5 per cent, to reflect the decline in oil prices late last year and a “sharper-than-anticipated decline in electricity prices” following the launch of the OEM.

“Core inflation is likely to come in near the mid-point of the revised forecast range,” they added.

“Meanwhile, CPI-All Items inflation is expected to average 0.5 to 1.5 per cent in 2019. Private road transport costs are projected to be largely unchanged from 2018, while accommodation costs are likely to decline at a slower pace this year.”

Source: CNA/ga(hs)