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Singapore's core inflation in August remains at 3-year low

Singapore's core inflation in August remains at 3-year low

Skyline of Singapore's central business district. (File photo: Reuters)

SINGAPORE: Singapore's core inflation rose 0.8 per cent year-on-year in August, unchanged from the previous month when it eased to its slowest pace in more than three years.

This was due to a steeper fall in the costs of retail goods and electricity and gas which was offset by higher food and services inflation, data released on Monday (Sep 23) showed. 

Core inflation excludes private transport and accommodation costs.

The headline consumer price index or overall inflation in August rose 0.5 per cent year-on-year, compared with the 0.4 rise in July. 

This was largely due to due to higher private road transport inflation and a smaller decline in accommodation costs, said the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) in a news release.

Food inflation rose 1.6 per cent year-on-year in August, compared to 1.4 per cent in the previous month. This was on account of a larger increase in the cost of non-cooked food items, as well as higher food services inflation.

READ: As Singapore relooks 2019 projections, economists warn of possible technical recession

The cost of retail goods fell by 1.5 per cent year-on-year in August compared to the 1.0 per cent fall in July.

“The steeper drop primarily reflected a sharper decline in the cost of medical products, household durables, household supplies and clothing and footwear items, as well as a slower pace of increase in the cost of personal care products,” MAS and MTI said.

The cost of electricity and gas fell at faster pace of 7.8 per cent year-on-year in August, compared to the 7.0 per cent decline in July. According to the news release, this was due “to the dampening effect of the nationwide launch of the Open Electricity Market on electricity prices”.

Services inflation edged up to 1.7 per cent year-on-year in August, from 1.6 per cent in July. This was on account of higher telecommunication services fees and a larger pickup in air fares, which more than offset a slower pace of increase in holiday expenses and fees for recreational and cultural services.

Private road transport costs increased by 0.6 per cent year-on-year in August, slightly faster than the 0.3 per cent rise in July, as a smaller decline in motorcycle and scooter prices outweighed a larger fall in petrol prices.

Accommodation costs fell by 0.7 per cent year-on-year in August, moderating from the 0.9 per cent drop in July, due to a more gradual decline in housing rentals.

READ: Singapore slashes annual GDP forecast to 0-1% amid ‘strong headwinds’

"For the rest of 2019, external sources of inflation are likely to be benign," said MAS and MTI. 

"Despite recent volatility, global oil prices for the full year are still expected to average lower than in the previous year. On the domestic front, labour market conditions have largely held up, contributing to moderate wage increases and higher unit labour costs."

They added that Singapore's core inflation for 2019 is expected to come in within the lower half of the 1 to 2 per cent forecast range, while overall inflation for the year is expected to average between 0.5 per cent and 1.5 per cent. 

Source: CNA/rw(gs)


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