Singapore July consumer prices fall for 9th straight month

Consumer prices fell 0.4 per cent in July from the same period a year ago.
Consumer prices fell 0.4 per cent in July from the same period a year ago.PHOTO: ST FILE

SINGAPORE - Inflation stayed in negative territory last month (July), the ninth straight month of declining prices, due mainly to a softer housing rental market.

The last time Singapore experienced such a prolonged drop in consumer prices was amid the global financial crisis in 2009, when prices fell for six straight months.

Consumer prices fell 0.4 per cent in July from the same period a year ago - a sharper dip than the 0.2 per cent fall tipped by economists in a Bloomberg poll.

It follows a 0.3 per cent decline in June, said the Monetary Authority of Singapore (MAS) and Ministry of Trade and Industry (MTI) on Monday (Aug 24).

Accommodation costs, which carry the heaviest weight in the consumer price index and are proxied by market rentals, fell 2.8 per cent last month, after falling 2.6 per cent in June.

Private road transport costs fell 0.1 per cent after rising by 1.2 per cent in June, brought down by lower certificate of entitlement (COE) premiums for cars.

Food inflation edged down to 1.9 per cent last month from 2.0 per cent in June, owing to smaller price increases for non-cooked food items and hawker food.

In contrast, stronger services inflation and a more moderate decline in electricity tariffs lifted core inflation - which excludes accommodation and private road transport costs and is seen as a better gauge of daily expenses - to 0.4 per cent last month from a year earlier.

Core inflation was at 0.2 per cent in June, after hitting a five-year low of 0.1 per cent in May.

MAS on Monday reiterated that it is sticking with its previous projections for whole-year core inflation and headline inflation to come in at the lower half of the forecast range of 0.5 - 1.5 per cent and -0.5 and 0.5 per cent respectively.

"External sources of inflation should remain generally benign, given ample supply buffers in the major commodity markets. 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 due to the moderate growth environment," MAS said.

"As a result, core inflation is expected to remain subdued at around the current rate in the near term. All-items inflation could ease further, given the dampening effects of car prices and imputed rentals on owner-occupied accommodation, amid the expected increase in the supply of COEs and newlycompleted housing units respectively. (Both inflation measures) could rise towards the end of the year and are expected to pick up further in 2016, as the effects of the budgetary measures and the drag from the past fall in global oil prices dissipate on a year-ago basis," MAS added.