Inflation fell for a ninth straight month in July due mainly to the Government's measures to cool the prices of homes and with car prices down.
Consumer prices dipped 0.4 per cent last month from the same period a year ago and followed a 0.3 per cent decline in June.
However, core inflation - which excludes accommodation and private road transport costs and is seen as a better gauge of daily expenses - has crept up, said the Monetary Authority of Singapore (MAS) and Ministry of Trade and Industry (MTI) yesterday.
Higher electricity tariffs and services costs lifted core inflation to 0.4 per cent last month from a year earlier - an improvement from June's reading of 0.2 per cent but still far below the historical average of 1.8 per cent.
The MAS reiterated that it is sticking with its previous projection for inflation to pick up towards the year end and into 2016, as the fall in global oil prices and the effects of Budget measures to help households contain costs dissipate.
But economists are not so sure, noting that the extent that wage growth pushes up prices may be overstated. Despite softer employment numbers, the MAS has not recanted its view of a "tight labour market", noted Mizuho Bank economist Vishnu Varathan.
And food inflation, which had climbed steadily in previous months, edged down to 1.9 per cent last month from 2 per cent in June, owing to smaller price increases for non-cooked items and hawker meals.
Meanwhile, the sustained tumble in oil prices, sharp currency falls in some key import partners and a slowdown in global growth are making it more costly for the central bank to keep the Singdollar on the same path of gradual appreciation.
The exchange rate is the central bank's key tool for managing imported inflation.
Nonetheless, analysts expect the MAS to stand pat with its policy stance at its bi-annual review in October.
Oil-related items account for just 3.8 per cent of the core inflation basket. And while Singapore may be importing lower prices from Malaysia, Indonesia and Thailand, where currencies have reached new lows against the Singdollar, the currency has in fact depreciated against other huge trade partners such as the United States.
The impending general election also holds some sway on how prices may move, in particular home and car prices, which are administrative decisions, noted Citi economist Kit Wei Zheng.
He said: "Favourable general election results (for the ruling party) may, at the margin, facilitate a shift in policy mix towards a more growth-friendly direction."