Singapore consumer prices fall for second straight month in December

SINGAPORE - Singapore's headline consumer price index fell 0.2 per cent year-on-year in December, on the back of falling transport and accommodation costs, according to figures released on Friday (Jan 23) by the Department of Statistics.

This is the second month in a row that consumer prices, measured year-on-year, have declined after they turned negative for the first time in five years in November.

But the December figure eased up from November's 0.3 per cent decline mainly on account of base effects associated with fluctuations in car Certificate of Entitlement (COE) premiums, the same reason for November's decline, the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) said in joint comments.

For the whole year, headline inflation eased to 1.0 per cent in 2014 from 2.4 per cent in 2013.

MAS and MTI again cautioned that inflation in 2015 could come in lower than expected, "should global oil prices be sustained at current low levels."

According to official forecasts, headline inflation is expected at 0.5-1.5 per cent and core inflation at 2-3 per cent this year.

Economists expect consumer prices here to ease further this year because of the continued slide in oil prices. But they have said that the chances of Singapore falling into a deflationary spiral are slim given a tight labour market and continued increases in wages, which are are likely to be passed on to consumers in higher prices of food and services.

MAS core inflation, which excludes the costs of accommodation and private road transport, was 1.5 per cent in December, similar to November, given stable services and food inflation.

For the whole of 2014, MAS core inflation edged up to 1.9 per cent from 1.7 per cent in 2013.

For December, DOS said that private road transport cost fell by a more moderate 5.7 per cent, compared to the 7.0 per cent decrease in November, owing to the relatively low base in the same period last year when COE premiums corrected.

This base effect more than offset the significant 11.2 per cent drop in petrol pump prices, following the 4.3 per cent decline a month ago.

Accommodation cost was 1.4 pr cent lower, extending the 1.2 per cent fall in November, as a result of the soft housing rental market.

Services inflation came in at 1.4 per cent, unchanged from November, as a steeper increase in telecommunication services fees was offset by a larger decline in holiday travel costs.

Food inflation was stable at 2.9 per cent in December. While the rise in non-cooked food prices moderated, prices of prepared meals picked up at a slightly faster pace.

CPI less imputed rentals on owner-occupied accommodation edged up by 0.2 per cent in December

ann@sph.com.sg