Singapore's core inflation eases again in April; overall consumer prices up slightly

Private road transport costs rose 1.1 per cent in April, reversing the 0.9 per cent drop in March. PHOTO: ST FILE

SINGAPORE - Core inflation in Singapore eased again in April as a fall in the cost of electricity and gas and lower food inflation more than offset higher services inflation, according to data released on Thursday (May 23).

Core inflation - which strips out private transport and accommodation costs - declined to 1.3 per cent on a year-on-year basis last month, after dipping to 1.4 per cent in March from 1.5 per cent in February.

Conversely, overall inflation rose slightly to 0.8 per cent year on year in April, from 0.6 per cent in March and 0.5 per cent in February.

This came as private road transport costs rose 1.1 per cent in April, reversing the 0.9 per cent drop in March. This was mainly driven by higher car prices and a stronger pick-up in petrol prices.

"Together with higher services inflation, this outweighed the fall in the cost of electricity & gas and a smaller increase in the price of food items," said the Ministry of Trade and Industry (MTI) and the Monetary Authority of Singapore (MAS) in a joint statement.

Both core and overall inflation came in just as analysts polled by Bloomberg had expected.

Services inflation came in at 2 per cent in April, higher than the 1.7 per cent in the preceding month.

"This was mainly due to larger increases in holiday expenses, domestic services fees, as well as recreational and cultural services fees, which outweighed the smaller increase in healthcare services fees. At the same time, the rise in airfares also contributed to the pickup in services inflation," MAS and MTI noted.

The overall cost of retail items also edged up, reaching 0.2 per cent in April compared with the 0.1 per cent in March. This largely reflected smaller declines in the prices of medical products and telecommunication equipment, as well as price increases in personal care products and household durables, which more than offset a fall in the prices of clothing and footwear items, MAS and MTI said.

However, accommodation costs fell by 1.4 per cent, as a smaller increase in housing maintenance and repairs costs offset a more gradual decline in housing rentals.

Food prices also eased to 1.3 per cent in April, down from the 1.6 per cent reported in March, as the prices of prepared meals and non-cooked food items registered a smaller increase.

The cost of electricity and gas fell by 2.8 per cent year-on-year in April, reversing the 3.9 per cent increase in the previous month.

This was mainly a result of lower electricity tariffs and the dampening effect of the phased nationwide launch of the Open Electricity Market on electricity prices, the MAS and MTIsaid.

For the rest of the year, external sources of inflation are likely to be benign, they added.

"While global oil prices have risen in recent months, they are currently not expected to exceed last year's average for 2019 as a whole. Global food prices should also only pick up slightly on average.

"On the domestic front, labour market conditions remain firm and will support moderate wage increases, such that unit labour costs should continue to rise."

They added that an acceleration in inflationary pressures is unlikely against the backdrop of slower GDP growth, uncertainties in the global economy, as well as the continuing restraining effects of MAS' monetary policy tightening in 2018.

MAS core inflation is expected to come in near the mid-point of the forecast range of 1-2 per cent this year. Overall inflation is expected to average 0.5 to 1.5 per cent.

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