Singapore March inflation eases further to -1%, core inflation up slightly at 0.6%

HEADLINE inflation fell for the 17th straight month in Singapore in March, but core inflation edged up slightly.

As expected, the consumer price index (CPI) for all items eased further to -1 per cent in March, from February's -0.8 per cent. This was due primarily to a "significant decline in private road transport cost", said the Monetary Authority of Singapore (MAS) and Ministry of Trade and Industry (MTI) in a joint release issued on Monday. An earlier Bloomberg survey of 20 economists put the median estimate at -1 per cent.

The MAS core inflation figure, which excludes the costs of accommodation and private road transport, was at a positive 0.6 per cent in March, slightly faster than February's 0.5 per cent. This was due to higher food prices.

However, MAS and MTI still see the slight uptick in core inflation as "milder than earlier expected", and thus are maintaining the outlook for 2016 to be "in the lower half of the 0.5 to 1.5 per cent forecast range".

Falling car and housing prices will continue to suppress inflation, and headline inflation is expected to "remain negative throughout 2016, and average -1 to 0 per cent for the whole year", said the release.

Private road transport cost fell at a faster pace of 5.9 per cent in March, compared with the 3.9 per cent decline a month earlier. This was brought about by lower petrol prices and a large fall in certificate of entitlement (COE) premiums.

Food prices rose 2.2 per cent from February's 2 per cent. This was due to a larger increase in the prices of non-cooked food items, which saw supply disruptions due to bad weather seen neighbouring countries. Hawker food prices also rose at a slightly faster pace.

Accommodation costs decreased by 3.2 per cent, similar to the previous month, reflecting the soft housing rental market, said the release.

Prices for overall services rose slower, at 0.4 per cent, down from 0.5 per cent a month earlier. Even though domestic services costs saw a stronger pickup and air fares fell at a slower rate, this was more than offset by a larger decline in telecommunication services fees.