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Singapore’s headline inflation edges up in May, core inflation holds steady
HIGHER private transport, retail and food inflation bumped Singapore’s headline inflation higher to 0.9 per cent in May, outstripping economists’ estimates of 0.6 per cent and rising from 0.8 per cent in April, according to consumer price index (CPI) figures released by the Department of Statistics on Monday.
A steep rise in car prices more than offset a smaller increase in petrol prices in May 2019. As a result, private road transport costs rose 1.5 per cent, up from a 1.1 per cent increase in April.
But accommodation costs fell 1.0 per cent year-on-year in May, slowing slightly from a 1.4 per cent drop in the previous month. This reflected a slower pace of decline in housing rentals and a stronger pickup in the cost of housing maintenance and repairs.
Meanwhile, core inflation, which strips out housing and private transport costs, was 1.3 per cent, at the same pace as in April and in line with economists’ forecasts. This came as higher retail and food inflation offset declines in electricity and gas costs.
Retail costs increased 0.5 per cent in May, compared with a 0.2 per cent rise in April, reflecting an upturn in personal effects prices and smaller declins in the costs of recreation and entertainment goods, clothing and footwear, and medical products, appliances and equipment. Food inflation edged up to 1.4 per cent from 1.3 per cent in the previous month on the back of a faster pace of increase in the prices of prepared meals.
In contrast, electricity and gas costs saw a steep decline of 4.0 per cent from a 2.8 per cent drop in April, as the phased nationwide launch of the Open Electricity Market continued to dampen electricity prices.
Services costs increased at 2.0 per cent in May, the same pace as in April.
The Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry maintained their inflation outlook from the previous month.
They said external sources of inflation are likely to be benign for the rest of 2019, and global oil prices are expected to remain below 2018’s average while food prices should pick up only slightly on average.
Labour market conditions remain firm domestically and will support moderate wage increases. However, inflationary pressures are unlikely to accelerate, amid slower economic growth, global uncertainty and the continued restraining effects of MAS’s monetary policy tightening in 2018.
Core inflation for 2019 is expected to come in near the mid-point of the official forecast range of 1 to 2 per cent. Headline inflation is expected to average 0.5 to 1.5 per cent.
In a slight change from their outlook for previous months, MAS and MTI said they expect that private road transport costs could pick up slightly this year as compared with 2018. Meanwhile, accommodation costs are still expected to decline at a slower pace this year.
Source: https://www.businesstimes.com.sg/government-economy/singapores-headline-inflation-edges-up-in-may-core-inflation-holds-steady