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Quick takes: Singapore inflation at 7-month low (Amended)
SINGAPORE'S consumer prices rose at a slower pace in September.
The Department of Statistics said on Thursday morning that inflation eased to 0.6 per cent as falls in housing and transport costs offset higher food prices. Economists had been expecting inflation to stay at 0.9 per cent, which was August's inflation rate. Core inflation, which strips out the costs of accommodation and private road transport, inched down to 1.9 per cent in September, from 2.1 per cent in August.
Here's what private-sector economists had to say:
Citi economists Kit Wei Zheng and Yap Kim Leng explain the lower core inflation:
"Lower services inflation was largely due to the effect of enhanced medical subsidies which caused a "one-off" reduction in the level of the health-care services cost... The fall in core inflation to below 2 per cent appears contrary to the Monetary Authority of Singapore's expectation that core inflation would rise into early 2015, given the still-tight labour market and higher food inflation, though the fall in September was largely because of larger medical subsidies and may thus be one-off."
ANZ economists Daniel Wilson and Glenn Maguire agree:
"Once dynamics such as the enhanced medical subsidies - which caused a one-off reduction in the level of health-care services cost - dissipate, a gradual uptrend in core inflation should continue. Supply-side adjustments will continue to characterise Singapore's growth path through 2015, keeping growth on a moderate path and core inflation sticky."
UOB economists Francis Tan and Jimmy Koh cut their headline inflation forecast down to 1.2 per cent and revised their core inflation forecast down to 2.1 per cent:
"For the rest of this year, we continue to believe that both private road transport and accommodation costs would continue to contribute negatively to headline inflation numbers. In particular, accommodation costs will remain subdued, given the large supply of newly-completed housing units and the existing housing cooling measures remaining in place."
An earlier version of this article said in the headline that September's inflation was a 6-month low. It is actually a 7-month low. The headline has been corrected.