Singapore consumer prices extend slump with 0.8% drop in February

People shopping for groceries at Giant Tampines.
People shopping for groceries at Giant Tampines.PHOTO: ST FILE

SINGAPORE - Inflation stayed in negative territory last month, the 16th straight month of declining prices and the longest streak of declines since 1977, due mainly to a softer housing rental market.

Consumer prices fell 0.8 per cent in February from the same period a year ago, due to a steeper decline in private road transport and accommodation costs.

It follows a 0.6 per cent decline in January, said the Monetary Authority of Singapore (MAS) and Ministry of Trade and Industry (MTI) on March 23.

The 0.8 per cent decline was in line with the median forecast of economists polled by Reuters.

Core inflation rose to 0.5 per cent in February, from 0.4 per cent in January, on account of higher food inflation, MAS said. Economists had expected this measure to come in at 0.4 per cent.

The core inflation measure strips out accommodation and private road transport costs to better gauge everyday expenses.

MAS on Wednesday reiterated that it is sticking with its previous projections for whole-year core inflation and headline inflation to average 0.5 - 1.5 per cent and -1.0 and zero per cent respectively.

MAS said in a statement: "Global oil prices are expected to average lower for the whole of 2016 compared to last year. On the domestic front, wages are expected to continue to increase in 2016, although at a more moderate pace than in the previous year."

Last month, MAS revised its forecast for overall inflation to come in between -1.0 per cent and zero for the whole of this year, down from an earlier forecast of -0.5 per cent to 0.5 per cent.

February's CPI figures is the last set of inflation data before MAS' next scheduled bi-annual monetary review in April. A Reuters poll published in early March showed that the risk of more monetary easing was seen rising as global headwinds buffeted Singapore's trade-reliant economy.

However, most analysts said their baseline expectation was for the MAS to keep policy unchanged in April, if core inflation measure s stayed around the current level, and barring risks such as a sharper slowdown in China.