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Singapore inflation weaker at -0.5% in April; sixth month in negative territory

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Singapore's headline inflation rate stayed in negative territory for the sixth month running in April, and core inflation continued to ease.

SINGAPORE'S headline inflation rate stayed in negative territory for the sixth month running in April, and core inflation continued to ease.

In year-on-year terms, headline inflation stood at -0.5 per cent in April (versus -0.3 per cent in March), while core inflation was at 0.4 per cent (compared to one per cent).

Core inflation excludes the costs of accommodation and private road transport.

Both inflation readings came in weaker than expected. For headline inflation, the median forecast of 17 economists polled by Bloomberg (before the Department of Statistics released the data on Monday) was 0 per cent. As for core inflation, the five economists surveyed had anticipated a rate of 0.7 per cent.

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On the headline inflation front, the easing was "mainly on account of a sharper price decline in oil-related items and a moderation in services inflation", said the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) in a joint statement.

The cost of oil-related items fell by 11.7 per cent in April, as electricity tariffs were reduced further due to lower global oil prices.

Services inflation eased to 1.1 per cent, thanks to a fall in holiday travel cost and the waiver of national examination fees.

Food inflation was stable at 2.1 per cent.

As expected, accommodation and private road transport costs remained drags on headline inflation. The former was 2.5 per cent lower, extending the 2.2 per cent decline in the previous month and reflecting the soft housing rental market.

Private road transport cost fell by a more modest 2.1 per cent in April, compared to March's 4 per cent drop. This was largely due to the smaller correction in Certificate of Entitlement (COE) premiums on a year ago basis.

MAS and MTI 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.

They added 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 the budgetary measures dissipate".

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