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Quick takes: Consumer prices fall for 8th consecutive month in June
SINGAPORE'S inflation rate remained in negative territory in June, although it inched up to -0.3 per cent from -0.4 per cent in May.
This was due to larger increases in the costs of services, food and private road transport, said the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) in a joint release.
Here are some comments from economists:
DBS senior economist, Irvin Seah:
"Headline inflation remained trapped in negative territory at -0.3% YoY inJune while core inflation is still treading near zero at 0.2%. Though not much has changed since last month, downside risks still remain for both indexes."
"The recent drop in COE premiums could well put downward pressure on the all items headline CPI inflation. Though core inflation might narrowly avoid dipping into the red in the coming months, much depends on the pace of deceleration in the economy."
"If the second quarter GDP truly marks the trough of the current growth cycle, then the core inflation probably would have bottomed. But with the uncertain global environment, nothing is certain. So keep a close watch on core inflation in the next 2-3 months."
UOB economists, Francis Tan and Jimmy Koh:
"This is the longest stretch of "deflation" since the last "deflationary period" back in Jun-Dec 2009, when consumer prices in Singapore fell from both the lack of consumer demand as well as corporate/business price-cutting in the aftermath of the global financial crisis.''
"Taking into account of the inflation environment in 1H 2015, where headline and core inflation registered -0.4% y/y and 0.2% y/y respectively, we revise our 2015 headline inflation forecast to -0.3% y/y, from +0.3% y/y previously."
"Also, our core inflation forecast will be revised lower to 0.6%, from 1.2% y/y previously. We estimate headline inflation to remain in the negative region until September before rising into the positive zone thereafter."
"Although the tone of the MAS seems to be a bit more dovish today, 2015 core inflation remains in their forecast range. As such, our opinion remains that the MAS will likely maintain their current monetary stance of a "modest and gradual appreciation" of the SGD NEER unchanged at our estimated 1.0% pa rate in the next policy meeting in October, and there should be no pressure in further easing of the appreciation rate. We also maintain our USD/SGD view that it will probably end 2015 at 1.38/USD."