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Singapore consumer prices fall for 18th month with April's 0.5% drop; core inflation up 0.8%

Monday, May 23, 2016 - 13:32
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Consumer prices in Singapore have officially fallen for a year and a half.

CONSUMER prices in Singapore have officially fallen for a year and a half.

Latest official figures released on Monday showed headline inflation decreased by 0.5 per cent year on year in April, putting this the 18th straight month of contraction, and also the longest stretch on record.

April's fall, however, was slightly better than market consensus. Economists polled by Bloomberg had put the expected fall at 0.7 per cent. It was also smaller than the one per cent drop recorded in March.

But the smaller decrease was due to conservancy rebates doled out in April last year.

April 2016's drop in headline inflation is due to the "low base associated with the disbursement of Service & Conservancy Charges (S&CC) rebates in April last year", wrote the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry in a joint release.

However, core inflation, which excludes the costs of accommodation and private road transport, went up by 0.8 per cent from 0.6 per cent a month ago. This was driven by higher services inflation as well as a smaller decline in electricity tariffs.

Even though MAS still kept its inflation forecasts in Monday's release, it focused "reduced labour market tightness" as an additional factor that will depress prices for this year.

MAS sees core inflation forecast to be in the lower half of 0.5-1.5 per cent range, and headline inflation to remain negative, and average -1 to 0 per cent for the whole year.

Fall in accommodation costs in April eased to 0.9 per cent, as compared to 3.2 per cent in March.

Weaker COE (certificate of entitlement) premiums and petrol prices pulled down private transport costs, which fell a deeper 7.1 per cent as compared to 5.9 per cent a month earlier.

Cost of electricity, liquefied petroleum gas, and gas fell by a more moderate 13.9 per cent. It was at a 14.9 per cent decline in March.

Services inflation crept up in April to 0.7 per cent from 0.4 per cent in March as holiday travel prices and salaries, and government levies for foreign domestic workers and costs of other domestic house-cleaning services went up.

Food prices inched up by 2.3 per cent from 2.2 per cent in March as prices of non-cooked food items increased.

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