SINGAPORE - Inflation inched up last month on the back of pricier healthcare and education services. But the tepid job market and subdued economic environment are expected to keep prices in check over the rest of the year.
The consumer price index (CPI) - the main measure of inflation - edged up 0.4 per cent last month compared with August last year, according to Department of Statistics data released on Monday (Sept 25).
This was slightly below economist estimates of a 0.6 per cent rise, and also down from 0.6 per cent in the preceding month. The slower pace of consumer price increases largely reflected a fall in private road transport inflation and to a lesser extent, a moderation in food and retail inflation, said a joint statement from the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry.
Private road transport inflation fell to 2.6 per cent in August from 3.5 per cent in July. This came as one-year road tax rebates expired in August 2016, outweighing the combined impact of a steeper increase in petrol prices and a smaller decline in car prices.
Food inflation was lower at 1.2 per cent in August compared with 1.4 per cent in July, on account of smaller increases in the prices of both non-cooked food and prepared meals.
The cost of retail and other goods, including water, rose by 0.9 per cent in August, lower than the 1.2 per cent recorded in the previous month, reflecting smaller increases in clothing and footwear prices.
Services inflation was 1.4 per cent in August, unchanged from the previous month, as the rise in holiday expenses was offset by smaller increases in the costs of medical and dental treatment as well as education services.
Core inflation, which strips out accommodation and private road transport costs to better gauge everyday expenses, was 1.4 per cent in August, slightly lower than July's 1.6 per cent.
MAS and MTI said oil prices have risen from their trough and are likely to average higher this year, while administrative price adjustments such as the hike in carpark charges, and service and conservancy charges will also contribute to "a temporary increase in inflation this year".
However, the lacklustre labour market and subdued economic environment will continue to limit the extent to which businesses pass on higher costs to consumers.
"Conditions remain slack in the labour market and this is expected to dampen underlying wage pressures, even as commercial and retail rents have continued to ease," they said in their statement.