Singapore June consumer prices down 0.3%, in 8th straight month decline

Singapore consumer prices fell for the eighth consecutive month of year-on-year declines.
Singapore consumer prices fell for the eighth consecutive month of year-on-year declines.PHOTO: BH FILE

SINGAPORE - Singapore consumer prices fell for the eighth consecutive month of year-on-year declines, figures from the Singapore Department of Statistics showed on Thursday (July 23).

The all-items consumer price index (CPI) dropped 0.3 per cent in June, exactly as predicted by the median forecast in a Reuters survey of economists.

But it was below the 0.4 per cent decline recorded in May and April's 0.5 per cent drop. This was mainly on account of larger increases in the costs of services, food, and private road transport, the Monetary Authority of Singapore (MAS) and Ministry of Trade and Industry (MTI) said jointly in a separate statement.

Headline CPI has been falling since November due to a slide in global oil prices in the second half of last year as well as falls in housing rents and private road transport costs. Budget measures to help Singapore households were also a factor.

In June, accommodation costs dropped 2.6 per cent, but private road transport costs rose 1.2 per cent.

Food prices were up 2 per cent, and services inflation was 0.5 per cent in June on the back of higher costs of hotel stays and telecommunication services.

Core inflation, which excludes the costs of accommodation and private road transport, came in at 0.2 per cent in June, up from 0.1 per cent in May.

On a monthly basis, consumer prices dropped 0.1 per cent in June, from a 0.5 per cent rise in May.

MAS and MTI said core inflation is expected to remain subdued at around the current rate in the next few months. But headline inflation could ease further given the dampening effects of car prices and imputed rentals on owner-occupied accommodation.

MAS Core Inflation and CPI-All Items inflation could subsequently rise towards the end of the year and in 2016, on account of higher global oil prices and as the effects of the budgetary measures dissipate, they added.

For 2015 as a whole, MAS Core Inflation and CPI-All Items inflation are projected to come in at the lower half of the forecast range of 0.5-1.5 per cent and -0.5-0.5 per cent respectively.

MAS had said on Tuesday that Singapore is not facing deflation despite the extended period of negative inflation rates.

MAS managing director Ravi Menon said the price declines were "not pervasive", as there have been moderate price increases in most items in the CPI basket. He added that wages could pick up next year.

As a result, MAS was "very comfortable" with its current policy settings, which are appropriate for ensuring medium-term price stability, Mr Menon said.

The soft inflation rate, and a quarter-on-quarter contraction in Singapore's second quarter economy, had raised expectations that MAS might ease monetary policy at its next scheduled meeting in October.