SINGAPORE - Overall consumer prices dropped for a 23rd straight month in September from a year earlier, although the rate of decline was the smallest since December 2014, signalling that Singapore's longest spell of negative inflation has bottomed.
CPI-All Items inflation dipped 0.2 per cent year on year last month, compared to 0.3 per cent decline in August, and in line with the median forecast from a Reuters poll of economists.
That is the smallest drop for the index since December 2014, when CPI fell 0.1 per cent.
The downward pressure on prices eased due to a smaller decline in private road transport cost, and to a lesser extent, higher food inflation.
Core inflation - which strips out private transport and accommodation costs to better gauge everyday expenses - eased slightly to 0.9 per cent in September from 1.0 per cent in the previous month.
This was due to lower services inflation which more than offset the stronger pickup in food prices, said the Monetary Authority of Singapore (MAS) and Ministry of Trade and Industry on Monday (Oct 24).
MAS and MTI said that headline inflation "has troughed and is projected to pick up to 0.5-1.5 per cent next year, from around -0.5 per cent in 2016, largely reflecting the rise in private road transport cost.
But they said the increase in core inflation will be gradual, given the absence of more generalised demand-induced price pressures. They project this indicator to average around 1 per cent in 2016 before rising to 1-2 per cent next year, as energy-related costs rise and the temporary disinflationary effects from budgetary measures fade.
For September, private road transport costs dipped 0.4 per cent in contrast to the 1.0 per cent drop in August mainly because of the smaller drop in petrol prices.
Accommodation costs decreased by 3.7 per cent, extending the 3.6 per cent decline in the previous month, amid continued softness in the housing rental market.
Food inflation rose to 2.2 per cent, from 2.0 per cent in August, due to a steeper rise in the cost of non-cooked food, while price increases for prepared meals remained stable.
Services inflation moderated to 1.5 per cent from 1.7 per cent a month earlier. This came as public road transport costs fell by 0.7 per cent in September, following the 0.9 per cent increase in August, which was due to the low base a year ago when free bus and train services were provided for National Day 2015 in conjunction with the SG50 celebrations.