Consumer price index rises 0.6% in June

For last month's CPI, there was faster growth in non-cooked food item prices. Food inflation was up by 1.5 per cent last month, from 1.3 per cent in May.
For last month's CPI, there was faster growth in non-cooked food item prices. Food inflation was up by 1.5 per cent last month, from 1.3 per cent in May.PHOTO: LIANHE ZAOBAO

Increase mainly due to rising food and services prices; core inflation also up by 1.7%

Overall inflation growth came in higher last month, mainly on increasing food and services prices, according to the Department of Statistics yesterday.

The consumer price index (CPI) rose by 0.6 per cent on the previous year - up from a gain of 0.4 per cent the month before - and in line with analyst expectations, as polled by Bloomberg. Core inflation, which strips out accommodation and private road transport costs, also grew at a faster clip. It came in 1.7 per cent higher than last year.

The Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) in a joint statement reiterated their inflation outlook of the previous month - imported inflation "is likely to rise mildly" on a global oil price rally and strengthening demand for food commodities, while domestic sources of inflation are expected to grow alongside higher domestic demand and a faster rise in wages.

"However, the extent of consumer price increases will remain moderate, as retail rents have stayed relatively subdued and firms' pricing power may be constrained by market competition," they said.

Headline inflation is projected to come in within the upper half of its 0 to 1 per cent forecast range for the full year - unchanged from the previous month's outlook.

Mr Khoon Goh, head of Asia research for ANZ, said: "Given that core inflation has averaged 1.5 per cent over the first half of this year, this means the MAS expects core inflation to pick up towards 2 per cent year-on-year later in the year. Based on domestic developments, a further modest tightening in October cannot be ruled out, though this will depend largely on how the external environment evolves."

RISE EXPECTED

Given that core inflation has averaged 1.5 per cent over the first half of this year, this means the MAS expects core inflation to pick up towards 2 per cent year-on-year later in the year.

MR KHOON GOH, head of Asia research for ANZ. Core inflation, which strips out accommodation and private road transport costs, came in 1.7 per cent higher than last year.

The central bank had moved to tighten policy in April, allowing "modest and gradual" appreciation in the Singdollar.

For last month's CPI, faster growth in non-cooked food item prices more than offset a slower rise in prepared meal costs, the MAS and MTI noted. The rise pushed food inflation up by 1.5 per cent last month, from 1.3 per cent in May.

Meanwhile, services inflation came in at 1.7 per cent, a hair's breadth above the 1.6 per cent gain in the previous month, which the MAS and MTI attributed to a stronger pick-up in holiday expenses, as well as an increase in telecommunications services fees against a decline in May last year.

Retail item prices grew by 1.6 per cent - above the previous month's 1.3 per cent rise - with price increases for clothing and footwear, and medical products, appliances and equipment.

Private road transport inflation also edged up, with costs rising by 0.4 per cent last month against the 0.1 per cent increase the month before, on faster growth in petrol prices, and compared with a smaller year-ago decline in car prices.

The fall in housing costs continued with a 3 per cent decline, down from the previous month's 3.2 per cent fall, which was attributed to a more gradual decrease in rents.

Mr Jameel Ahmad, global head of currency strategy and market research at currency broker FXTM, said: "The increase in inflationary pressures in Singapore last month could possibly be linked to higher import prices, as a result of the strength in the US dollar over the past couple of months."


Correction note: This article has been edited for clarity and accuracy.

A version of this article appeared in the print edition of The Straits Times on July 24, 2018, with the headline 'Consumer price index rises 0.6% in June'. Print Edition | Subscribe