Singapore inflation edges up in July on higher retail, water prices

SINGAPORE inflation edged up in July, with headline inflation coming in below market consensus at 0.6 per cent, but higher than 0.5 per cent in the previous month, due to higher retail and water prices.

This meant that core inflation, which excludes the costs of accommodation and private road transport, came in as expected at 1.6 per cent, slightly higher than 1.5 per cent in June.

Private sector economists polled by Bloomberg before the Department of Statistics released July's data on Wednesday had forecast headline inflation to come in at 0.7 per cent and core inflation at 1.6 per cent.

In a joint statement, the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) said that retail and water prices rose by 1.2 per cent collectively, reversing the 0.2 per cent decline in June.

Private road transport inflation and services inflation also came in higher in July, at 3.5 per cent and 1.4 per cent respectively, due to a smaller decline in car prices and increase in telecommunication services fees.

Cost of electricity and gas rose by a comparatively smaller 7.9 per cent in July, compared to the 19.1 per cent increase in June, due to a smaller increase in electricity tariffs on a year-ago basis following a fall in global oil prices in the preceding quarter.

Cost of accommodation fell by a steeper 4.1 per cent in July, compared to the 3.9 per cent decline in the preceding month, due to a smaller increase in the cost of housing maintenance and repairs.

Food inflation remains stable at 1.4 per cent, as the rise in non-cooked food inflation was offset by lower price increases for prepared meals.

The MAS and the MTI reiterated their full-year inflation forecasts, saying: "For 2017, MAS Core Inflation is expected to average one-2 per cent, compared with 0.9 per cent in 2016, while CPI-All Items inflation is projected to rise to 0.5-1.5 per cent from -0.5 per cent last year."