Singapore's inflation edges up slightly to -0.3% in February

SINGAPORE'S headline inflation remained in negative territory at -0.3 per cent in February, although this was a touch higher than January's reading of -0.4 per cent.

The slight edging up in inflation was due to higher food and services inflation, said the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) in joint comments.

The median forecast of 18 economists polled by Bloomberg before the Department of Statistics (DOS) released the data on Monday was for a -0.2 per cent year-on-year headline inflation figure.

Core inflation, which excludes the costs of accommodation and private road transport, came in higher at 1.3 per cent in February, compared to one per cent in January.

This reflected stronger food and services inflation. Food prices rose by 2.5 per cent compared to January's 2.2 per cent increase - a result of the seasonal pick-up in demand during the Chinese New Year period.

Services inflation increased to 1.5 per cent, from 1.2 per cent a month ago. This was largely led by the higher cost of holiday travel during the festive season, and the increase in tuition and other fees.

Still, reflecting the soft housing rental market, accommodation costs declined by 2.1 per cent in February - extending the 1.9 per cent fall in January.

Private road transport cost was 5.8 per cent lower, following the 5 per cent drop in January. This was due to the sharper correction in COE (Certificate of Entitlement) premiums.

MAS and MTI said that headline and core inflation "could ease further, before rising in the second half of 2015 on account of some recovery in global oil prices and base effects associated with the low inflation in Q4 2014".

They reiterated official forecasts; headline inflation and core inflation are projected to average -0.5 to 0.5 per cent, and 0.5 to 1.5 per cent, respectively.