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Singapore’s headline, core inflation both ease in October
SINGAPORE’S headline and core inflation both eased in October, contrary to economist expectations that they would hold steady.
Headline inflation was 0.4 per cent in October, down from 0.5 per cent the month before, according to Department of Statistics figures on Monday.
Core inflation, which excludes accommodation and private road transport costs, was 0.6 per cent, down from 0.7 per cent the month before.
But the outlook for the quarters ahead has not changed. In their joint statement on the latest inflation figures, the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) kept the same wording as the previous month.
The easing in headline inflation was due to a steeper decline in the cost of electricity and gas, as well as lower services inflation.
Electricity and gas costs fell 12.5 per cent year on year in October, steepening from September’s 8.3 per cent fall, due to lower electricity tariffs and the Open Electricity Market’s continued dampening effect on electricity prices.
Services inflation was 1.2 per cent, down from 1.4 per cent in September, with a slower pace of increase for holiday expenses, education services, and medical and dental treatment fees.
The cost of retail goods fell 0.8 per cent, the same pace of decline as the previous month. Food inflation edged up to 1.7 per cent, from 1.6 per cent in September.
Private road transport inflation was 1 per cent, up from 0.5 per cent the previous month. Accommodation costs declined 0.4 per cent, less steep than September’s 0.5 per cent decline.
The MAS and MTI said that external sources of inflation are likely to stay benign in the quarters ahead, though oil prices could be volatile in the near term.
Domestic labour market conditions are softening slightly, which would lower wage growth in 2019 and 2020. “At the same time, non-labour costs such as retail rents should stay subdued, and any cost pass-through to consumers would be constrained by the weaker economic environment,” they added.
They expect full-year core inflation to come in at the lower end of the 1 to 2 per cent official forecast range, and headline inflation to be around 0.5 per cent. In 2020, both core and headline inflation are expected to average 0.5 to 1.5 per cent.
Source: https://www.businesstimes.com.sg/government-economy/singapores-headline-core-inflation-both-ease-in-october