Singapore May consumer prices down 0.4%, in 7th straight month decline, but moderating from April

Shoppers walking past a Mandarin Gallery boutique on Orchard Road.
Shoppers walking past a Mandarin Gallery boutique on Orchard Road.PHOTO: ST FILE

SINGAPORE - Consumer prices in Singapore dipped 0.4 per cent year-on-year in May, moderating from a 0.5 per cent decline in April, on account of the higher cost of private road transport, the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) said on Tuesday.

Economists polled by Reuters had expected headline inflation, or the CPI All-Items inflation, to match April's 0.5 per cent fall, which was the biggest drop since late 2009.

May's data showed that private road transport cost rose by 1.0 per cent, after falling by 2.1 per cent in April, due to higher Certificate of Entitlement (COE) premiums and a smaller correction in petrol pump prices compared to a year ago.

Accommodation cost fell by 2.5 per cent in May, similar to the previous month, reflecting the soft housing rental market.

Services inflation eased to 0.5 per cent, from 1.1 per cent a month earlier, largely owing to budgetary measures including the reduction in the concessionary foreign domestic worker (FDW) levy and the waiver of national examination fees, as well as a smaller increase in telco services fees.

Food inflation moderated to 1.8 per cent from 2.1 per cent in April, as the slower rise in non-cooked food prices more than offset the sharper price increases for restaurant meals.

MAS core inflation, which excludes the costs of accommodation and private road transport, edged up 0.1 per cent, compared to 0.4 per cent in April. This mainly reflected the impact of budgetary measures on services costs, as well as softer food inflation, said the report.

Looking ahead, MAS and MTI said core inflation could remain subdued at around the current rate in the next few months as the suite of budgetary measures will help to alleviate some of the price pressures faced by consumers.

But CPI All-Items inflation could ease further given the additional dampening effects of car prices and imputed rentals on owner-occupied accommodation, amid the expected increase in the supply of COEs and newly-completed housing units, they said.

They expect both inflation indicators to rise towards the end of the year and into 2016, on account of higher global oil prices and as the effects of the budgetary measures dissipate.

For 2015, they kept their projections the same: MAS Core Inflation and CPI-All Items inflation to average 0.5-1.5 per cent and -0.5- 0.5 per cent respectively.