Inflation rises slightly to 0.6% in July on higher water tariffs, pricier retail items

A woman washing vegetables at the Wellness centre located at the void deck of a block in Yishun Street 72.
A woman washing vegetables at the Wellness centre located at the void deck of a block in Yishun Street 72.PHOTO: ST FILE

SINGAPORE - Higher water tariffs that kicked in last month and pricier retail items like clothing and household goods helped pushed inflation up by 0.6 per cent in July from a year ago, a slightly faster pace than the 0.5 per cent rise in June.

Water tariffs were raised from July 1 by 15 per cent as part of a phased 30 per cent increase over two years announced in this year's Budget. The Government's U-Save rebates, which have been increased and will partially offset the impact of higher water prices, are not taken into account in the consumer price index (CPI).

Collectively, retail and water prices rose year-on-year by 1.2 per cent, reversing the 0.2 per cent decline in June, said a joint report from the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry on Wednesday (Aug 23).

The MAS core inflation measure - which excludes price changes for cars and accommodation as they are influenced more by government policies - also came in slightly higher in July, at 1.6 per cent, compared to 1.5 per cent in June.

July's CPI came in slightly lower than the 0.7 per cent rise forecast by analysts polled by Bloomnerg. Consumer prices have risen steadily for eighth straight months. Economists have said the steadily rising inflation numbers are unlikely to shift MAS' neutral monetary policy stance.

For the first half-year, headline inflation rose 0.7 per cent while core inflation increased by 1.4 per cent.

For July, private road transport inflation also came in higher at 3.5 per cent, compared to 3 per cent in June, mainly due to a smaller decline in car prices, MAS and MTI said.

Services inflation rose slightly to 1.4 per cent in July from 1.3 per cent in the previous month, largely reflecting an increase in telecommunication services fees following price declines in June.

In comparison, the cost of electricity & gas rose by a much smaller 7.9 per cent in July, compared to the 19.1 per cent increase in June. This was due to a smaller increase in electricity tariffs on a year-ago basis following a fall in global oil prices in the previous quarter.

The cost of accommodation fell by a steeper 4.1 per cent in July, compared to the 3.9 per cent decline in June, owing to a smaller increase in the cost of housing maintenance and repairs.

Food inflation was stable at 1.4 per cent in July, as the rise in non-cooked food inflation was offset by lower price increases for prepared meals, said MAS and MTI