Singapore headline inflation eases to 0.5% in June

The Singapore central bank's core inflation measure rose 1.5 per cent, slightly lower than the 1.6 per cent increase in May.
The Singapore central bank's core inflation measure rose 1.5 per cent, slightly lower than the 1.6 per cent increase in May.ST FILE PHOTO

SINGAPORE - Singapore's overall consumer prices rose 0.5 per cent in June from a year earlier, slowing significantly from the 1.4 per cent year-on-year increase seen in May, according to figures from the Department of Statistics on Monday (July 24).

This was partly due to the timing of the disbursement of service & conservancy charge (S&CC) rebates, which dragged down the cost of housing maintenance and repairs.

But there was also a slowing in private road transport inflation to 3 per cent in June this year from 6.1 per cent the month before, mainly due to a fall in car prices and smaller petrol price increases.

The Singapore central bank's core inflation measure - which excludes price changes for cars and accommodation, which are influenced more by government policies - rose 1.5 per cent, slightly lower than the 1.6 per cent increase in May, due to lower services and food inflation.

Food inflation eased to 1.4 per cent per cent in June from 1.5 per cent in May, as the rate of increase in the prices of non-cooked food items moderated. Meanwhile, the prices of prepared meals continued to rise at a stable pace.

Services inflation edged down to 1.3 per cent in June from 1.4 per cent in May, due to a decline in telecommunication services fees.

June's data makes it the seventh straight month of steadily rising consumer prices. Economists have said the steadily rising inflation numbers are unlikely to shift the central bank's neutral monetary policy stance.

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

By household income groups, headline inflation for the lowest 20 per cent income group fell marginally by 0.1 per cent in the first half of the year, compared with the same period a year ago.

For the middle 60 per cent and highest 20 per cent income groups, inflation increased by 0.6 per cent and 1 per cent respectively over the same period.

During the first half of the year, all three income groups experienced higher prices of food and petrol, as well as tuition and other fees.

Healthcare services cost, road tax, electricity tariffs and parking fees also increased from the same period a year ago.

However, accommodation costs as well as bus and train fares fell for all three income groups.

The Monetary Authority of Singapore and Ministry of Trade & Industry said they are maintaining their forecast for core inflation to come in at 1 to 2 per cent this year, and for headline inflation to be between 0.5 and 1.5 per cent.

They said the projected pickup in inflation is not so much due to demand-induced price pressures but more because of a rise in energy prices and the impact of administrative price increases, such as the rise in water tariffs and S&CC.

U-Save rebates, which have also been increased and will partially offset the impact of higher water prices, are not taken into account in the CPI.

United Overseas Bank economist Francis Tan wrote in a note: "This shows that the central bank is not expecting runaway prices and that although current economic conditions are better than just a year ago, the weakness in the labour market will set a limit on cost-pushed inflation."

As such, he added, the MAS will likely maintain its neutral policy stance on the Singapore dollar.