Thailand
Singapore core consumer prices fall further in December, but headline inflation flat
SINGAPORE saw core consumer prices fall further in December, even as the headline measure moved out of deflation, according to Department of Statistics (Singstat) consumer price index (CPI) figures on Monday.
Core inflation fell to -0.3 per cent year on year, while headline inflation was flat at 0 per cent.
Economists had expected both core and headline inflation to hold steady from the previous month at -0.1 per cent, but the divergence was fuelled by an increase in private road transport costs.
With the December figures, full-year core and headline inflation both came in at -0.2 per cent in 2020, down from 1 per cent and 0.6 per cent respectively in 2019.
The Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) kept their 2021 inflation estimates unchanged, with only minor revisions to their outlook for the coming quarters.
The fall in core inflation, which strips out accommodation and private road transport costs, was driven by a larger -0.8 per cent decline in services costs, deepening from -0.2 per cent in November.
Food inflation also fell to 1.6 per cent, down from 1.8 per cent in November.
Other categories saw smaller declines in costs. The cost of retail and other goods fell 1.2 per cent, easing from November’s 2 per cent fall.
Electricity and gas costs declined 6.7 per cent, compared to November’s 6.8 per cent fall.
Headline inflation was boosted by private transport costs, which rose 1.2 per cent in December on the back of a sharper increase in car prices, a turnaround from November’s -1.3 per cent figure. Accommodation inflation was steady at 0.3 per cent.
In a joint statement, the MAS and MTI maintained their 2021 forecasts for core inflation to average zero to 1 per cent, and headline inflation to be between -0.5 and 0.5 per cent.
But they now expect external inflation to pick up in the quarters ahead amid a recovery in global oil prices, in contrast to the previous release where they had expected it to remain low.
Nonetheless, they added that “the extent of the increase will be capped by persistent negative output gaps in Singapore’s major trading partners”. They expect domestic cost pressures to stay low, as wage growth and commercial rents are likely to remain subdued.
Accommodation costs are expected to fall as rentals could soften, due in part to the decline in foreign employment, while private transport costs “should rise modestly” amid an anticipated reduction in the supply of Certificates of Entitlement in 2021.
Source: https://www.businesstimes.com.sg/government-economy/singapore-core-consumer-prices-fall-further-in-december-but-headline-inflation