Singapore consumer prices fall in April for sixth straight month, by bigger-than-expected 0.5%

Consumer prices in Singapore fell for a sixth straight month in April by a bigger-than-expected margin due to a sharper price decline in oil-related items and a moderation in services inflation, offical data showed on Monday. -- PHOTO: BLOOMBERG&nbsp
Consumer prices in Singapore fell for a sixth straight month in April by a bigger-than-expected margin due to a sharper price decline in oil-related items and a moderation in services inflation, offical data showed on Monday. -- PHOTO: BLOOMBERG 

SINGAPORE - Consumer prices in Singapore fell for a sixth straight month in April by a bigger-than-expected margin due to a sharper price decline in oil-related items and a moderation in services inflation, offical data showed on Monday.

Singapore's all-items consumer price index (CPI) eased 0.5 per cent last month from the same period a year ago, higher than the 0.3 per cent decline in March.

It was also more than the 0.1 per cent dip predicted by economists in a Reuters poll.

The last time Singapore experienced such a prolonged drop in consumer prices - also known as deflation - was in 2009.

Core inflation - which excludes accommodation and private road transport costs and is seen as a better gauge of daily expenses - came in 0.4 per cent in April compared to 1 per cent in March.

The data was jointly released by the Monetary Authority of Singapore (MAS) and the Ministry of Trade & Industry (MTI).

Briefing on the inflation outlook, they forecast that core inflation and CPI-All Items inflation could ease further before rising towards the end of the year and into 2016, as global oil prices pick up and the effects of Singapore's budgetary measures dissipate.

They kept their inflation forecasts for the year unchanged: Core inflation and all-items inflation are projected to average 0.5-1.5 per cent and -0.5-0.5 per cent respectively.

External sources of inflation should remain generally benign, given ample supply buffers in the major commodity markets, MAS and MTI said.

They added: "Notably, global oil prices are likely to be much lower for the whole of 2015 compared to the US$93 average recorded last year. Although underlying cost pressures stemming from the tight labour market remain, the pass-through to consumer prices is expected to be tempered in the near term by the moderate growth environment.

"At the same time, the suite of budgetary measures announced recently will help to alleviate some of the price pressures faced by consumers. Car prices and imputed rentals on owner-occupied accommodation should also continue to dampen inflation, amid the expected increase in the supply of COEs and newly-completed housing units."

For April, the cost of oil-related items fell by 11.7 per cent in April, following the 7.9 per cent decrease in March, as electricity tariffs were reduced further owing to lower global oil prices.

Services inflation eased to 1.1 per cent in April from 1.5 per cent in March, largely led by a fall in holiday travel cost and the waiver of national examination fees.

Food inflation was stable at 2.1 per cent as higher costs of prepared meals was offset by slower price increases in non-cooked food items.

Accommodation cost, which carry the heaviest weight in the CPI, was 2.5 per cent lower, extending the 2.2 per cent decline in the previous month, reflecting the soft housing rental market.

Private road transport cost fell by a more modest 2.1 per cent in April, compared to the 4.0 per cent drop in March, largely due to the smaller correction in COE premiums on a year ago basis.

On Tuesday, the government will release detailed data on Singapore's economic performance in the first quarter. Economists polled by Reuters say it's likely to show that the economy expanded 2.2 per cent, marginally better than the 2.1 per cent initially estimated, as exports surged in March and industrial production held up better than expected.