Poll: Inflation set to dip for 21st straight month

Singapore's consumer price index (CPI) is expected to show an annual decline for the 21st straight month in July, a Reuters poll showed, but some analysts say prices may have bottomed out and the index could return to positive territory by the year end.

The median from a Reuters survey of 12 economists was for the CPI to have fallen 0.5 per cent last month from a year ago.

In June, the CPI fell 0.7 per cent, extending a record run of consecutive year-on-year declines in headline CPI to 20 months - the longest streak since Singapore's independence in 1965. The CPI slid 1.6 per cent in May for its biggest year-on-year drop in nearly 30 years.

"I think CP... has bottomed out, and I do expect the headline number to return to positive level towards the end of the year. If not, early next year," said Mr Irvin Seah, senior economist at DBS Bank. But this will be mainly due to a comparison against a low base recorded a year ago, Mr Seah said. "There's really a lack of impetus that will drive inflation higher," he added.

Headline CPI has been falling on an annual basis since November 2014, hit by lower global oil prices as well as falls in housing rents and private transport costs.

According to the Reuters survey, core CPI was forecast to have risen 1 per cent last month from a year earlier. Core CPI rose 1.1 per cent in June, the fastest pace since February last year.

Core CPI excludes changes in the prices of cars and accommodation, which are influenced more by government policies.

REUTERS

A version of this article appeared in the print edition of The Straits Times on August 20, 2016, with the headline 'Poll: Inflation set to dip for 21st straight month'. Print Edition | Subscribe