SINGAPORE - Core inflation in October cooled to 0.6 per cent, the lowest in more than three years since March 2016 when it also fell to the same level, according to data released on Monday (Nov 25).
The latest reading was down slightly from the 0.7 per cent recorded in September, the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) said.
The dip was due to a steeper fall in the cost of electricity and gas and a slower pace of increases in the cost of services, they said.
Core inflation excludes the costs of accommodation and private road transport, which are more affected by government policy and are not considered part of Singaporeans' everyday expenses.
Headline or overall inflation also eased, to 0.4 per cent, slightly down from 0.5 per cent in September.
Both readings were lower than economists' expectations, according to a Bloomberg poll. They had expected core inflation to stay at 0.7 per cent and headline inflation to remain unchanged at 0.5 per cent.
Maybank economists Chua Hak Bin and Lee Ju Ye wrote in a note: “We expect inflationary pressures to stay muted next year as growth recovers at a sluggish pace and wage growth moderates.”
MAS and MTI did not make any changes to the recently-revised inflation outlook for 2019. Full-year core inflation is tipped to come in at the lower end of the 1 to 2 per cent official forecast range, while overall inflation is seen at around 0.5 per cent. For 2020, both core and headline inflation are expected to average 0.5 to 1.5 per cent.
For October, electricity and gas costs decreased by 12.5 per cent on an annual basis in October, a steeper fall compared with the 8.3 per cent in September because of lower electricity tariffs and the dampening effect of the national Open Electricity Market launch on electricity prices.
Services inflation fell to 1.2 per cent on an annual basis in October, down from 1.4 per cent in September, reflecting a slower pace of increase in holiday expenses, education services and medical and dental treatment costs.
Cost of retail goods fell by 0.8 per cent year-on-year in October, the same as in September. The larger drop in prices of clothing and footwear, household durables and alcoholic drinks was offset by a smaller decline in the costs of recreation and entertainment goods and higher prices of personal care and medical products.
Food inflation edged up to 1.7 per cent year-on-year in October, from 1.6 per cent in September, because of an increase in the prices of non-cooked food and prepared meals.
Private road transport inflation rose to 1 per cent year-on-year in October from 0.5 per cent in September while accommodation costs fell by 0.4 per cent last month, easing from the 0.5 per cent drop in September.