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Singapore inflation unchanged at -0.3% in March; fifth month in negative territory

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SINGAPORE's headline inflation rate stayed negative for a fifth month running in March and core inflation eased, as food inflation was lower and accommodation and private road transport costs continued to fall.

The market had been expecting the consumer price index (CPI) to fall a slightly larger 0.5 per cent year-on-year, according to the median forecast of 16 economists polled by Bloomberg. But inflation remained at -0.3 per cent, unchanged from February's rate.

Accommodation costs fell 2.2 per cent in March, as the housing market continued to soften, extending February's 2.1 per cent decline. Private road transport costs also continued to fall, but by a more moderate 4 per cent compared to February's 5.8 per cent drop. This followed the increase in petrol duty rates, the Monetary Authority of Singapore (MAS) and Ministry of Trade and Industry (MTI) said in joint comments on Thursday.

Meanwhile, food inflation eased to 2.1 per cent in March, from 2.5 per cent in January. Non-cooked food prices rose at a slower pace as demand eased after the Lunar New Year.

And, a sharper rise in telecommunication services fees was offset by a decline in air fares and smaller rise in hospitalisation charges, keeping services inflation stable at 1.5 per cent.

As a result, the MAS core inflation rate, which excludes accommodation and private transport costs, came in at one per cent. This was down from 1.3 per cent in February and mainly reflects lower food inflation, MAS and MTI said. It was also lower than the 1.1 per cent core inflation market economists had been expecting.

In month-on-month terms, the CPI rose 0.2 per cent in March, following a 0.1 per cent rise in February.

MAS and MTI said that both headline and core inflation could ease further before rising towards the end of the year and into 2016, as global oil prices pick up and the effects of enhanced medical subsidies fade.

They reiterated official forecasts for 2015: headline inflation and core inflation are projected to average -0.5 to 0.5 per cent, and 0.5 to 1.5 per cent respectively.

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