Singapore consumer prices fall at milder 0.3% pace in August

Shoppers at Cold Storage in Great World City.
Shoppers at Cold Storage in Great World City.PHOTO: ST FILE

SINGAPORE - Singapore consumer prices declined for a 22nd straight month in August from a year earlier, though the rate of decline eased from recent months.

The consumer price index (CPI), a measure of inflation, dipped 0.3 per cent last month compared to its 0.7 per cent drop in July, according to data from the Statistics Department released on Friday (Sept 23).

That is the smallest year-on-year drop in CPI since June 2015, when CPI also fell by 0.3 per cent. Analysts polled by Reuters had expected August's CPI to decline by 0.4 per cent.

Core inflation, which strips out accommodation and private road transport costs to better gauge everyday expenses, ticked up 1 per cent, unchanged from July, as higher services inflation offset the more modest increase in food prices. This was slightly lower than the 1.1 per cent rise expected by analysts.

Singapore is experiencing the longest stretch of negative inflation since 1977. Headline CPI has been falling on an annual basis since November 2014, hit by lower global oil prices as well as falls in housing rents and private transport costs.

But core inflation is expected to pick up gradually over the course of the year as the disinflationary effects of oil as well as budgetary and other one-off measures ease.

"However, the pace of increase will be restrained by the weak external price outlook, subdued economic growth prospects, and the reduction in labour market tightness," the Monetary Authority of Singapore and Ministry of Trade and Industry said in its accompanying joint report on Friday.

They predict that the all-items CPI hit bottom in the second quarter of this year and will rise in coming months.

For core inflation, the Government expects this to average around 1 per cent this year.

In August, private road transport costs declined by 1 per cent year-on-year, compared to the 4.4 per cent fall in July. This was due to the expiry of the one-year road tax rebate for petrol vehicles.

Accommodation cost fell by 3.6 per cent, similar to July, reflecting the continued softness in the housing rental market.

But prices elsewhere in the economy continued to edge upwards, except for clothing and footwear costs which dropped by 1.9 per cent.

Services inflation edged up 1.7 per cent, from 1.6 per cent in July. Public road transport cost increased by 0.9 per cent, compared to a decline of 0.8 per cent in July, given the low base in August last year.

In comparison, the price of education services rose at a slower pace, reflecting a more moderate increase in university fees compared to last year.

Food inflation eased slightly to 2 per cent in August, from 2.1 per cent in July. This was due to a smaller increase in the cost of non-cooked food which more than offset the stronger pick-up in the price of restaurant meals.