INFLATION in Singapore eased for the second straight month, as lower oil prices cut transport costs.

The consumer price index (CPI) last month increased 5.5 per cent from a year earlier after gaining 6.4 percent in October, figures released by the Department of Statistics showed on Tuesday.

This is the lowest it has been in 11 months and was right in line with economists' expectations.

With last month's inflation seasonally-adjusted declining 0.2 per cent compared to October - the first time it has been negative since September last year - economists say that the disinflationary effects of the recession are now starting to be felt more strongly in the economy.

They said there is more pressure on the Monetary Authority of Singapore to shift down its currency band either before or at its next policy meeting in April.

The CPI for November increased driven by higher costs of housing and food the report said.

Housing costs grew 15.7 per cent on the back of more expensive accomodation and higher electricity tariffs, while food prices rose 6.9 per cent as cooked food, rice and fresh vegetables among others were all more expensive.

This was offset by lower transport and communication costs which fell 1.9 per cent from the year before and 1.7 per cent from October.

This was not surprising as last month saw oil prices fall below US$50 a barrel coming off a record high of US$147 in July, to lower pump prices here, while certificate of entitlement (COE) premiums fell to a low of $2 from $10,500.

Lower holiday travel costs also drove down the 'recreation and others' category by 0.2 per cent from October the report said.

Economists expect inflation to continue to moderate next year as commodity prices fall further and the global slowdown dampens worldwide demand.

Barclays Capital economist Leong Wai Ho said that at home, an expected 24.7 per cent fall in electricity tariffs from this quarter and lower property prices will also slow inflation further.

Inflation is expected to fall to between 1 to 2 per cent next year the Ministry of Trade and Industry said in a report last month. It has averaged 6.7 per cent from January through November this year.

Citigroup economist Kit Wei Zheng said: 'The recession will... have a disinflationary, if not temporary deflationary impact, if past recessions are taken as a guide.'

He expects inflation next quarter to come in at around 3 per cent or less.

HSBC economist Prakriti Sofat said: 'Softening inflation against a backdrop of dismal exports and industrial production numbers increases the pressure on the MAS to shift down its currency band either at or before the next meeting in April.

'However it is important to bear in mind that a currency adjustment would do little in the face of the complete collapse in external demand which is impacting the whole region.'