SINGAPORE: A drop in the cost of electricity and gas, as well as a slower pace of increase in the cost of services, saw Singapore's headline (CPI-All Items) inflation rate ease to 0.4 per cent in October, compared with 0.5 per cent in September.
Core inflation - which strips out the price of private road transport and accommodation - also dipped to 0.6 per cent in October from September's 0.7 per cent.
AdvertisementAdvertisementThe decline comes amid a 12.5 per cent fall in the price electricity and gas in October, said a joint media release by the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI). This was deeper than the 8.3 per cent drop in September.
This was mainly due to lower electricity tariffs and the dampening effect of the nationwide launch of the Open Electricity Market (OEM) on electricity prices, they said.
Services inflation slid to 1.2 per cent year-on-year in October, from 1.4 per cent in September, reflecting a slower pace of increase in holiday expenses, as well as education services and medical & dental treatment fees, the authorities said.
The cost of retail goods fell by 0.8 per cent year-on-year in October, the same pace of decline as in September.
AdvertisementAdvertisement"While there was a larger drop in the prices of clothing and footwear, household durables and alcoholic drinks and tobacco, this was offset by a smaller decline in the costs of recreation and entertainment goods, as well as higher prices of personal care and medical products following price declines in September," the release said.
Food inflation edged up to 1.7 per cent in October, from 1.6 per cent in September, due to a larger increase in the prices of non-cooked food and prepared meals.
Private road transport inflation rose to 1 per cent in October, from 0.5 per cent in the previous month.
This was due to a larger increase in car prices, which outweighed a steeper fall in petrol prices, the statement said.
Accommodation costs fell by 0.4 per cent year-on-year in October, easing from the 0.5 per cent drop in September, on account of a more gradual decline in housing rentals.
OUTLOOK
MAS and MTI said that 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.
On the domestic front, labour market conditions are softening slightly.
"This would lower wage growth in 2019 and 2020, compared to last year. At the same
time, non-labour costs such as retail rents should stay subdued, and any cost pass-through to consumers would be constrained by the weaker economic environment," MAS and MTI added
MAS Core Inflation is expected to come in at the lower end of the 1–2 per cent range in 2019, and average 0.5–1.5 per cent in 2020.
CPI-All Items inflation is projected to be around 0.5 per cent this year and average 0.5–1.5 per cent in 2020, as the negative contribution of imputed rentals to headline inflation dissipates, the agencies added.
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