Consumer prices inch up 0.4% in September

Travellers at Changi Airport Terminal 2 this month. Services inflation rose 1.5 per cent last month from 1.4 per cent in August, mainly due to a faster pace of increase in telecoms services fees. These more than offset a smaller rise in holiday expen
Travellers at Changi Airport Terminal 2 this month. Services inflation rose 1.5 per cent last month from 1.4 per cent in August, mainly due to a faster pace of increase in telecoms services fees. These more than offset a smaller rise in holiday expenses and a larger decline in airfares.PHOTO: REUTERS

Core inflation rose to 1.5%, from 1.4% in August, due to costlier services

Consumer prices kept inching up last month, rising 0.4 per cent from a year earlier - an unchanged pace from August and in line with analyst expectations.

Costlier services offset a sharper decline in car prices and a slower increase in petrol prices, the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry said in a joint report yesterday.

Services inflation rose 1.5 per cent last month from 1.4 per cent in August, mainly due to a faster pace of increase in telecommunication services fees. These more than offset a smaller rise in holiday expenses and a larger decline in airfares.

Private road transport inflation eased to 2.1 per cent from 2.6 per cent in August.

Accommodation costs fell by 3.9 per cent, the same rate of decline as in August, amid continued softness in the housing rental market.

Food inflation was 1.2 per cent last month, the same as in August, as the prices of non-cooked food and prepared meals rose at a similar pace in both months.

IMPLICATIONS

The core inflation shows a relatively larger amount of 1.5 per cent, implying that the higher prices of food, healthcare and education may begin to exert more pressure on low-income households.

DR TAN KHAY BOON, a senior lecturer at SIM Global Education.

The MAS core inflation measure - which strips out accommodation and private road transport costs, which tend to be more influenced by government policy - rose to 1.5 per cent last month from 1.4 per cent in August, because of higher services inflation.

This was slightly higher than the 1.4 per cent increase tipped by analysts.

Dr Tan Khay Boon, a senior lecturer at SIM Global Education, noted that the mild increase in prices from a year ago, the stagnation between August and September as well as month-on-month zero inflation rates show that headline inflation is still quite subdued here.

"Based on the headline inflation, there is less need for the MAS to adjust the exchange rate appreciation path at the current stage," he said.

"However, the core inflation shows a relatively larger amount of 1.5 per cent, implying that the higher prices of food, healthcare and education may begin to exert more pressure on low-income households."

Prime Minister Lee Hsien Loong told a reception of overseas Singaporeans in Washington on Sunday that Singapore's economy is doing quite well this year. He noted that it will likely expand close to 3 per cent this year, fuelled by manufacturing and services.

"We have got a projection of 2 per cent to 3 per cent growth. I expect that it will be at the upper end of this because the third-quarter results look good, and I hope that it will continue," he said.

A version of this article appeared in the print edition of The Straits Times on October 24, 2017, with the headline 'Consumer prices inch up 0.4% in September'. Print Edition | Subscribe