Singapore's core inflation remains unchanged in November

Singapore's core inflation remains unchanged in November

SINGAPORE: Singapore's core inflation rate was unchanged in November as lower services inflation was offset by a smaller decline in the cost of retail goods, official data showed on Monday (Dec 23).

Core inflation – which excludes price of private transport and accommodation – stood at 0.6 per cent, said the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) in a joint news release.

This was slightly lower than the 0.7 per cent forecast seen in a Reuters poll.

The headline consumer price index or overall inflation rose 0.6 per cent from a year earlier, matching forecasts, and higher than October's 0.4 per cent rise.

This was due to an increase in private road transport inflation and smaller declines in the costs of retail goods and accommodation.

Private road transport inflation rose to 2.3 per cent year-on-year in November, from 1 per cent in the previous month, reflecting higher petrol prices and Electronic Road Pricing (ERP) charges.

The cost of retail goods fell by 0.5 per cent, less than the 0.8 per cent drop in October, as it saw a more moderate pace of decline due to smaller drops in the costs of household durables and clothing & footwear.

Accommodation costs decreased by 0.2 per cent year-on-year in November, easing from the 0.4 per cent drop in October, as housing rentals declined more gradually, the release said.

The cost of electricity & gas declined by 11.8 per cent, less than the 12.5 per cent drop in the previous month, as the Open Electricity Market (OEM) had a smaller dampening effect on electricity prices following a slowdown in new take-up rates, the joint release added.

Food inflation was 1.7 per cent year-on-year in November, unchanged from October, as a slower pace of increase in the cost of non-cooked food offset a faster pace of increase in the prices of prepared meals.

Services inflation edged down to 1.1 per cent in November, from 1.2 per cent in October, largely due to a smaller increase in medical & dental treatment fees.

“In the quarters ahead, external sources of inflation are likely to remain benign, amid weak demand conditions, and generally well-supplied food and oil commodity markets. However, oil prices could be volatile in the near term, reflecting geopolitical risks,” MTI and MAS said.

On the domestic front, labour market conditions are softening slightly and this would lower wage growth in 2019 and 2020, compared to last year, the release added. At the same time, non-labour costs such as retail rents should stay subdued due to the weaker economic environment.

Singapore’s core Inflation is expected to come in at the lower end of the 1 to 2 per cent range in 2019, and average 0.5 - 1.5 per cent in 2020.

Overall inflation is projected to be around 0.5 per cent in 2019, and average 0.5 - 1.5 per cent in 2020.

Source: CNA/mn(hm)

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