Singapore's core inflation stays in negative territory for September

Singapore's core inflation stays in negative territory for September

File photo general pedestrian crowd
Pedestrians crossing a road in Singapore. (File photo: Calvin Oh)

SINGAPORE: Core consumer prices in Singapore continued to decline in September, albeit at a slower rate, data from the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) showed on Friday (Oct 23).

Core inflation was -0.1 per cent in September, compared with -0.3 per cent in August, mainly driven by smaller reductions in the cost of services and electricity and gas, said MAS and MTI.

Private transport and accommodation are excluded from the gauge.

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The consumer price index (CPI)-all items inflation rose to 0 per cent in September, compared with the -0.4 per cent the previous month, as costs of services, electricity and gas and private transport fell at a more gradual pace.

CPI measures the average price changes in a fixed basket of consumption goods and services commonly purchased by resident households. It excludes non-consumption expenditures such as loan repayments, income taxes and purchases of houses.

For September, private transport costs declined 0.1 per cent year-on-year, improving from the 2.3 per cent drop the month before due to larger increases in car prices.

Cost of services also registered a slower decline of 0.1, from 0.5 the month before, as telecommunication fees increased and tuition and other fees saw a smaller drop.

The rate of decline in the cost of electricity and gas also slowed slightly at 14.2 per cent, as new subscriptions under the Open Electricity Market slowed. 

Retail and other goods fell at the same rate as the previous month, as declines in clothing and footwear, as well as telecommunication equipment, were offset by increases in the cost of household durables and a smaller decline in the prices of personal care products.

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Inflation for accommodation and food prices remained unchanged.

MAS and MTI said external inflation is "likely to remain low amid weak demand conditions in key commodity markets and the persistence of negative output gaps in Singapore’s major trading partners" in the coming quarters.

They also forecast that cost pressures will stay subdued on the domestic front, and accumulated slack in the labour market will weigh on wages.

"Nevertheless, core inflation is forecast to turn mildly positive in 2021, as the disinflationary effects of government subsidies introduced this year fade and demand for some domestic services gradually picks up," said MAS and MTI.

"Meanwhile, accommodation costs are expected to fall, due in part to the decline in foreign employment. On the other hand, private transport costs should rise modestly amid an anticipated reduction in the supply of Certificates of Entitlement."

Core inflation and overall inflation are expected to come in between -0.5 per cent and 0 per cent in 2020. For the next year, core inflation is expected to average 0 to 1 per cent and overall inflation to come in between -0.5 and 0.5 per cent.

Source: CNA/ga(ac)