Singapore inflation eases for 20th month in June, projected to rise in coming months

SINGAPORE's inflation fell by 0.7 per cent from a year ago in June, compared to the 1.6 per cent drop in May when the government rebates to households cut housing maintenance-related costs.

"This was mainly due to a smaller 3.5 per cent decline in accommodation costs, compared to the 6.0 per cent decrease in May when S&CC rebates to households lowered the cost of housing maintenance & repairs. Meanwhile, actual and imputed rental costs continued to fall amid the soft housing market," a joint release from the Monetary Authority of Singapore and the Ministry of Trade and Industry said on Monday.

Service & Conservancy Charges (S&CC) rebates, which affect housing maintenance and repair cost, were disbursed in April, July and October last year, and will be disbursed in May, July and October this year. As a result, base effects raised consumer price index-all items inflation on a year-ago basis in April 2016 but lowered it in May 2016.

Inflation as measured by CPI less imputed rentals on owner-occupied accommodation (OOA) was zero per cent in June, up from a negative 1.0 per cent a month earlier.

Private road transport cost fell by a more modest 5.7 per cent, compared to the 7.6 per cent decline a month earlier due to a more moderate drop in car prices on the back of a smaller contraction in Certificate of Entitlement (COE) premiums on a year-ago basis.

Services inflation picked up slightly to 1.6 per cent from 1.5 per cent in the previous month due to larger contributions from rising holiday expenses and telecommunication services fees.

In comparison, food inflation edged down to 2.1 per cent from 2.2 per cent a month ago, as price increases for prepared meals, such as hawker food and restaurant meals, moderated.

MAS core inflation, which excludes the costs of accommodation and private road transport, increased slightly to 1.1 per cent from 1.0 per cent in May, as a result of higher services inflation.

For 2016, MAS core inflation is likely to average around 1 per cent. CPI-All Items inflation has likely troughed in Q2, and is projected to rise in the coming months. For the year as a whole, CPI-All Items Inflation is forecast to come in at negative 1.0-0.0 per cent.