Singapore consumer prices pick up pace with 0.7% rise in February but core inflation eases

Shoppers at the self-checkout counters at NTUC Fairprice outlet at Toa Payoh HDB Hub during the Chinese New Year.
Shoppers at the self-checkout counters at NTUC Fairprice outlet at Toa Payoh HDB Hub during the Chinese New Year.ST PHOTO: KUA CHEE SIONG

SINGAPORE - Singapore's consumer price index rose at the fastest annual pace in more than two years in February, figures from the Department of Statistics on Thursday (March 23) showed.

All-items inflation rose 0.7 per cent year on year last month, from 0.6 per cent in January, as the stronger pickup in private road transport costs more than offset lower services and food inflation.

In contrast, MAS core inflation, which strips out changes in the price of cars and housing, eased to 1.2 per cent last month from 1.5 per cent in January.

Private road transport costs jumped by 7.1 per cent, higher than the 4.1 per cent rise in January, but this had much to do with the relatively low base in February last year, the Monetary Authority of Singapore and Ministry of Trade and Industry said in their joint report on consumer price developments on Thursday.

Compared to the previous month, private road transport costs inched up by 0.1 per cent, as higher petrol pump prices and Electronic Road Pricing charges more than offset the decline in car prices due to lower Certificate of Entitlement premiums.

Services inflation slowed to 1.5 per cent year on year in February from 1.9 per cent a month earlier, largely because of a fall in air fares and a more modest increase in holiday expenses.

Food inflation moderated to 1.3 per cent from 1.9 per cent in January, due to the smaller rise in non-cooked food prices after Chinese New Year as well as the high base last year.

Accommodation costs fell by 4 per cent in February, extending the 3.9 per cent decline in the previous month, amid continued softness in the housing rental market.

February's headline inflation matched the median estimate of analysts polled by Reuters.

The climb of 0.7 per cent in the CPI is the highest since September 2014, when the index rose that much from a year earlier.

"(February figure) is just a continuation of the trend of dissipating disinflation" Mizuho Bank economist Vishnu Varathan told Reuters before the report.

Headline CPI rose for the first time in two years in December, breaking a record run of disinflation, as Singapore's grew stronger than expected in the fourth quarter of 2016, with export numbers the strongest in five years.

Most analysts now expect MAS to keep monetary policy unchanged in its next policy review in April.