SINGAPORE: After a record two years of negative inflation, consumer prices in Singapore finally rose in December last year, with headline inflation coming in at 0.2 per cent.
The rise in the consumer price index (CPI) was due to a larger increase in private road transport cost, which rose by 1.7 per cent in December following a 0.2 per cent rise in November. The rise was the result of higher petrol prices and car park fees, said the Monetary Authority of Singapore (MAS) and Ministry of Trade and Industry (MTI) on Monday (Jan 23).
Services inflation edged up to 1.6 per cent from 1.5 per cent in November, mainly due to a faster pace of increase in holiday expenses, which more than offset the larger contraction in telecommunication services fees.
Food inflation was 2 per cent, unchanged from the previous month. Accommodation costs fell by 3.8 per cent in December, similar to the previous month, reflecting continued softness in the housing rental market, MAS and MTI said.
Overall retail goods inflation eased to zero per cent in December from 0.2 per cent in November, largely on account of a fall in the prices of personal care products.
December's increase comes after the headline consumer price index stayed flat in November from a year earlier, coming off a deflationary trend for the first time in two years.
For the whole of 2016, headline inflation came in at -0.5 per cent for the second consecutive year.
Core inflation, which excludes the cost of accommodation and private road transport, was slightly lower at 1.2 per cent compared to 1.3 per cent in November. The decline was mainly due to a fall in retail goods inflation more than offsetting an increase in services inflation, MAS and MTI said.
For the whole of 2016, core inflation rose to 0.9 per cent, from 0.5 per cent the year before.
PRICES EXPECTED TO REMAIN ON THE RISE
According to one economist, domestic cost pressures are likely to stay muted due to weak consumption and a subdued labour market. However, prices are still expected to remain on the rise amid stronger growth in developed markets.
"As consumers we're certainly more worried about whether prices will be moving higher this year - particularly at a time when nominal wage growth will be quite stagnant in 2017," said UOB economist Francis Tan. "That means real purchasing power of the consumer may be eroded. So I think this is a key concern, key worry for Singapore consumers.
"However, I think that going forward, we shouldn't worry that much because higher prices are linked to better growth globally, and what that means is that some of our manufacturing sectors first, particularly the electronics cluster will be seeing stronger demand and that would spillover positively to precision engineering, and spillover to the services sector," he added.