Singapore consumer prices fall for 13th straight month

Shoppers perusing through products on the shelves of Mustafa Centre's supermarket.
Shoppers perusing through products on the shelves of Mustafa Centre's supermarket. PHOTO: ST FILE

SINGAPORE - Singapore consumer prices fell on an annual basis for the 13th straight month in November, as food and services inflation eased, government figures showed on Wednesday (Dec 23).

The headline all-items consumer price index (CPI) declined 0.8 per cent last month, unchanged from October, the Monetary Authority of Singapore and Ministry of Trade & Industry said in a joint release.

This was slightly more than the median estimate for a 0.7 per cent fall in a Reuters poll of analysts.

MAS' core inflation measure, which strips out changes in the price of cars and accommodation, edged up 0.2 per cent in November compared to 0.3 per cent in the previous month, also largely reflecting lower prices of food and services.

Food inflation moderated to 1.6 per cent last month from 1.8 per cent in October, on account of a slower rise in the prices of non-cooked food and restaurant meals.

Overall services inflation edged down to 0.7 per cent from 0.8 per cent in October. This mainly reflected the lower cost of healthcare services following the introduction of MediShield Life, MAS and MTI said.

While housing costs continued to fall in November, the decline in private road transport cost was more modest. Accommodation cost was 3.0 per cent lower, similar to the drop in the previous month, reflecting the soft housing rental market.

Private road transport cost fell by a more modest 1.7 per cent, compared to the 2.3 per cent decline in October, largely due to higher petrol pump prices compared to a year ago.

Holiday travel cost rose at a faster pace, alongside a more moderate decline in air fares.

As inflation has come down and economic growth has been sluggish, Singapore's central bank has eased monetary policy twice this year, most recently in October.

Looking ahead, MAS and MTI said external sources of inflation are likely to stay generally benign, given ample supply buffers in the major commodity markets and weak global demands. Oil prices, in particular, are expected to remain low for the whole of 2016.

Food price increases, which could face some upward pressure due to the ongoing El Niño phenomenon, will be tempered by the availability of abundant food stockpiles.

"On the domestic front, some wage cost pressures remain, but their pass-through to consumer prices will continue to be constrained by the subdued economic growth environment," they added.

MAS core inflation is expected to pick up gradually over the course of 2016 as the year-on-year disinflationary effects of lower oil prices, as well as budgetary and other one-off measures, ease.

For the full year, the government is expecting MAS core inflation to come in at 0.5-1.5 per cent in 2016, compared to around 0.5 per cent n 2015.

The all-items CPI index is projected to average between -0.5 and 0.5 per cent in 2016, compared to around -0.5 per cent this year, dampened by lower car prices and imputed rentals, due to an expected increase in the supply of COEs and new home completions.