Singapore's headline, core inflation hold steady in March

Headline inflation was unchanged at 0.7 per cent year on year, according to official figures released on Monday (April 23).
Headline inflation was unchanged at 0.7 per cent year on year, according to official figures released on Monday (April 23).PHOTO: ST FILE

Singapore recorded its fourth month of positive inflation last month, with the consumer price index holding steady from February.

Headline inflation was unchanged at 0.7 per cent year on year, according to official figures released yesterday.

Core inflation was 1.2 per cent last month, the same as in February, as price changes in the core components of the consumer price index (CPI) basket were broadly stable.

The core inflation figure excludes changes in the price of cars and accommodation, and better reflects everyday consumption patterns.

The Monetary Authority of Singapore (MAS) and Ministry of Trade and Industry said in a joint statement that they expect a temporary increase in inflation this year on the back of "administrative price adjustments". These include the rise in carpark charges and household refuse collection fees, and upcoming increases in water prices and service and conservancy charges.

U-Save rebates, which have been increased and will partially offset the impact of higher water prices, are not taken into account in the CPI.

"Overall, domestic sources of inflation remain relatively muted. Conditions in the labour market have slackened, and this is expected to dampen underlying wage pressures, even as commercial and retail rents have eased," they said.

"The subdued economic environment will also limit the extent to which businesses pass on higher import and administrative costs to consumers."

MAS held its exchange rate- based monetary policy steady last week, saying a "neutral" stance will be needed for an extended period as it looked to support an economy that contracted in the first quarter amid lingering risks to the global outlook.

OCBC Bank's head of treasury research and strategy, Ms Selena Ling, said she expects headline and core inflation to accelerate modestly in the second quarter and more quickly in the second half of the year, owing to the planned administrative price hikes and given the relatively low base last year.

If inflation numbers start coming in higher than expected, this could spur some action by MAS at its policy review in October, she said.

Last month, private road transport inflation eased to 6.9 per cent from 7.1 per cent in February, as the faster pace of increase in car and motorcycle prices was offset by the smaller pick-up in petrol prices, Department of Statistics figures showed.

The cost of accommodation fell by 4 per cent last month, the same rate of decline as in the previous month, amid continued softness in the housing rental market.

A version of this article appeared in the print edition of The Straits Times on April 25, 2017, with the headline 'Singapore's headline, core inflation hold steady in March'. Print Edition | Subscribe