Negative inflation in S'pore does not mean deflation

A negative inflation rate should not be equated with deflation. This has been said before but is worth reiterating, now that Singapore has reported its sixth month of negative inflation in a row.

Official statistics on Monday showed that the consumer price index (CPI) fell 0.5 per cent year-on-year in April - sending inflation in the opposite direction from what economists were expecting. Their median forecast was for zero per cent inflation, up from an inflation rate of -0.3 per cent in March.

It's easy to dramatise the figures. On top of half a year of sub-zero inflation, April's core inflation also fell under one per cent for the first time in about five years. Core inflation - which gives a better idea of the underlying price level and in Singapore's case excludes volatile accommodation and private road transport costs - slipped to 0.4 per cent in April, from one per cent in March.