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Singapore inflation eases further to 0.6% in September

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Consumer price inflation again eased more than expected to 0.6 per cent in September, as drops in housing and transport costs offset higher food prices.
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CONSUMER price inflation again eased more than expected to 0.6 per cent in September, as drops in housing and transport costs offset higher food prices.

The median forecast of 20 economists polled by Bloomberg before the Department of Statistics released the data on Thursday was for a 0.9 per cent year-on-year rise in the consumer price index (CPI).

Core inflation, which strips out the costs of accommodation and private road transport, continued to inch down to 1.9 per cent in September, from 2.1 per cent in August.

The Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) said in joint comments that the easing in September was due to "a smaller increase in services costs and a further decline in accommodation cost".

Services inflation slowed to 1.7 per cent in September from 2.1 per cent in the preceding month.

MAS and MTI said: "This was mainly due to the moderation in the increase in medical and dental treatment fees, from 4.6 per cent in August to 2.4 per cent in September, which reflects the impact of enhanced medical subsidies, including the Pioneer Generation Package (PGP). However, the contributions of telecommunication services, tertiary education and air transport were higher compared to August."

As a result of the soft housing rental market, accommodation costs fell by 0.6 per cent, extending August's 0.2 per cent decline.

Private road transport costs were lower by 2.8 per cent, after falling by 2.9 per cent in August, reflecting a more moderate fall in certificate of entitlement (COE) premiums than a year ago.

Food inflation was higher at 3 per cent, against 2.9 per cent a month ago, because of a steeper increase in the prices of prepared meals.

Last week, MAS lowered its headline inflation forecast to 1-1.5 per cent in 2014, from 1.5-2 per cent earlier.

Its 2014 core inflation forecast was narrowed to 2-2.5 per cent, compared to 2-3 per cent previously.

In 2015, headline inflation is expected to come in at 0.5-1.5 per cent, while core inflation is projected to average 2-3 per cent.

 

Read what economists have to say about the dip in core inflation:

% yoy changeSeptemberAugust
Headline inflation0.60.9
MAS core inflation1.92.1