SINGAPORE: Consumer prices in Singapore deepened their decline in October, even as authorities forecast a “mildly positive” turn in 2021.
Core inflation fell to -0.2 per cent year-on-year in October, compared with -0.1 per cent in September, data from the Monetary Authority of Singapore (MAS) and Ministry of Trade and Industry (MTI) showed on Monday (Nov 23).
MAS’ core inflation measure excludes accommodation and private transport.
The overall consumer price index (CPI)-all items inflation, which includes both components, fell to -0.2 per cent year-on-year last month, compared with 0 per cent in September.
The inflation figures came as the trade and industry ministry said Singapore's economy was expected to shrink between 6 per cent and 6.5 per cent this year, after a smaller-than-expected 5.8 per cent contraction in the third quarter.
The fall in core inflation was mainly driven by steeper declines in the costs of services and retail and other goods, as well as lower food inflation, MAS and MTI said in a joint news release.
Services costs fell by -0.5 per cent on account of lower telecommunication services inflation and a larger decline in tuition and other fees.
The steeper fall was also largely driven by sharper declines in holiday expenses and airfares in October, using imputed prices, the agencies said.
Retail and other goods declined -1.6 per cent after telecommunication equipment costs and prices of recreational goods dropped. Prices of household supplies also rose at a more gradual pace, said MAS and MTI.
Food inflation edged down to 1.7 per cent in October, as prices of non-cooked food grew at more moderate pace.
Private transport costs saw a larger drop of -1.3 per cent in October, compared to -0.1 per cent in September. This was attributed to car prices rising at a more gradual pace, and fuel costs declining more sharply.
Accommodation inflation eased to 0.3 per cent from 0.4 per cent in September, due to a slower pace of increase in housing rents.
As for electricity and gas, the decline in prices halved to -7.2 per cent last month after upward revisions in electricity and gas tariffs.
MAS and MTI retained their outlook from September on external inflation remaining low, amid weak demand in key commodity markets and “the persistence of negative output gaps” in Singapore’s major trading partners.
Cost pressures are expected to stay subdued on the domestic front, with “accumulated slack” in the labour market weighing 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.
Accommodation costs are expected to continue falling due in part to decline in foreign employment, while private transport costs should rise modestly ahead of an anticipated reduction in Certificate of Entitlement supply next year.
The agencies' projections of core inflation and overall inflation remained unchanged from last month, at between -0.5 and 0 per cent in 2020.
In 2021, core inflation is expected to average 0 to 1 per cent, while overall inflation is expected to be between -0.5 and 0.5 per cent.