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Singapore core inflation dips to 1.8% in September; lower than economists' expectations
SINGAPORE'S core inflation for September 2018 - which strips out the cost of accommodation and private road transport - eased to 1.8 per cent on a year-on-year (y-o-y) basis, compared to 1.9 per cent in August, as a moderation in retail inflation offset a pickup in services inflation.
The figure was lower compared to economists' expectations of 1.9 per cent.
Figures from the Department of Statistics showed on Tuesday that headline inflation came in at 0.7 per cent y-o-y in September, the same pace of increase as in August, as lower retail inflation was offset by higher services inflation and a smaller decline in accommodation costs.
The overall cost of retail items rose by 1.5 per cent y-o-y in September, compared to the 2 per cent increase in August. The moderation mostly reflected a slower pace of increase in the prices of clothing and footwear, the statement said, and a steeper fall in the prices of recreation and entertainment goods and telecommunication equipment.
Services inflation came in at 1.4 per cent y-o-y in September, slightly higher than August's 1.3 per cent, while accommodation costs fell 2.5 per cent y-o-y in September from the 2.6 per cent decline in the preceding month.
Meanwhile, private road transport costs shed 0.1 per cent y-o-y in September, less than the 0.2 per cent decline in August. On a y-o-y basis, the prices of motorcycles and scooters fell in September, reversing the increase
in the previous month.
The decline was more than offset by a steeper increase in petrol prices, a smaller drop in car prices, as well as an increase in Electronic Road Pricing (ERP) charges, the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) said in a joint press statement.
"In the quarters ahead, imported inflation is likely to increase on account of higher global oil and food prices. On the domestic front, the improving labour market should underpin a faster pace of wage growth in 2018 and 2019, compared to 2017," the statement said.
Inflation for the non-core components of the consumer price index is expected to increase in 2019, both the MAS and the MTI said, and private road transport costs are expected to rise due to higher COE premiums amid an anticipated tapering in supply, while imputed rentals on owner-occupied accommodation will "fall by a lesser extent than in 2018" as rental
demand gradually picks up.
Core inflation is expected to "rise modestly" in the coming months, within the forecast range of 1.5–2 per cent in 2018 and 1.5–2.5 per cent in 2019, while headline inflation is expected to be about 0.5 per cent in 2018, before picking up to 1–2 per cent in 2019.