Consumer prices fall for eighth straight month
TODAY file photo
SINGAPORE — Consumer prices in Singapore fell for the eighth consecutive month in June, leading some economists to cut their forecasts for both headline and core inflation for the year as the ongoing cooling measures from the government and low oil prices continue to dampen prices.
The All-Items Consumer Price Index (CPI) fell by 0.3 per cent last month compared to a year ago, slightly better than the 0.4 per cent decline in May. The smaller drop was attributed mainly to a larger increase in the costs of services, food, and private road transport, the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) said today (July 23).
Economists in a Reuters poll had also expected a 0.3 per cent decline in consumer prices for June.
“General prices in Singapore remained muted as the cost of goods and services continued to be kept under the lid from government’s administrative measures to lower oil prices. The growth rates of accommodation and private road transport costs remained low due to government’s cooling measures,” said UOB economists Mr Francis Tan and Mr Jimmy Koh in a research note.
Services inflation nosed up to 0.55 per cent in June from 0.46 per cent in May, while food inflation picked up to 2 per cent, from 1.8 per cent the previous month.
Private road transport costs increased by 1.2 per cent, from 1 per cent the previous month, as a decline in petrol pump prices moderated.
Accommodation costs fell for the eleventh consecutive month, down by 2.6 per cent, following the 2.5 per cent decline a month earlier as the housing rental market continued to soften.
Core inflation, which excludes the costs of accommodation and private road transport, edged up 0.2 per cent, up from the five-year low of 0.1 per cent in May. The increase was due to higher services and food costs, MAS and MTI said, adding that the reading is “expected to remain subdued” at around the current rate in the next few months.
In the report today, MAS and MTI also maintained their headline and core inflation target range at minus 0.5 per cent to 0.5 per cent and 0.5 per cent to 1.5 per cent, respectively, but cautioned that both are likely to come in at the lower half of the forecast.
This reiterates comments made on Tuesday by MAS managing director Ravi Menon, who stressed that although headline CPI is likely to stay negative throughout the year, the Republic is not facing a deflation.
“I want to emphasise, we are not facing deflation. The price declines we’ve seen are neither persistent nor pervasive,” Mr Menon said. He added that the central bank’s policy stance is at a “very comfortable” setting, and any possible policy revisions in its scheduled policy review in October would be entirely data-dependent.
Some economists have cut inflation forecasts for the full year, as a lacklustre first-half dampens optimism for prices to head north.
OCBC Bank cut its headline and core inflation forecasts, to minus 0.2 per cent and 0.5 per cent, respectively, lower than the earlier predictions of 0 per cent and 1 per cent.
UOB Bank also revised its forecast to minus 0.3 per cent from 0.3 per cent for headline inflation, and 0.6 per cent from 1.2 per cent for core inflation.
“We estimate headline inflation to remain in the negative region until September before rising into the positive zone thereafter,” said Mr Tan and Mr Koh.
