Core inflation down again in March, Latest Business News - The New Paper

Core inflation down again in March

This article is more than 12 months old

It declined to 1.3 per cent year on year, although overall inflation rose slightly to 0.8 per cent

Core inflation in Singapore eased again last month, as a fall in the cost of electricity and gas, and lower food inflation more than offset higher services inflation, according to data released yesterday.

Core inflation - which strips out private transport and accommodation costs - declined to 1.3 per cent on a year-on-year basis last month, after dipping to 1.4 per cent in March from 1.5 per cent in February.

Conversely, overall inflation rose slightly to 0.8 per cent year on year last month, from 0.6 per cent in March and 0.5 per cent in February.

This came as private road transport costs rose 1.1 per cent, reversing the 0.9 per cent drop in March. This was driven mainly by higher car prices and a stronger pickup in petrol prices.

Both core and overall inflation came in just as analysts polled by Bloomberg had expected.

United Overseas Bank economist Barnabas Gan said: "COE (certificate of entitlement) premiums rose this month, led by both Category A and Category B prices. Brent crude prices also rose past the US$70 (S$97) a barrel handle last month, the highest since November last year.

"Meanwhile, higher domestic services fees were seen last month as well, given that the non-concessionary foreign domestic worker monthly levy was raised last month as announced in Singapore Budget 2018."

Services inflation came in at 2 per cent last month, higher than the 1.7 per cent in March. The Ministry of Trade and Industry and the Monetary Authority of Singapore said: "This was mainly due to larger increases in holiday expenses, domestic services fees, as well as recreational and cultural services fees, which outweighed the smaller increase in healthcare services fees. At the same time, the rise in airfares also contributed to the pickup in services inflation."

The overall cost of retail items also edged up, reaching 0.2 per cent last month, compared with 0.1 per cent in March. This largely reflected smaller declines in the prices of medical products and telecommunications equipment, as well as price increases in personal care products and household durables, which offset a fall in the prices of clothing and footwear items.

But accommodation costs fell by 1.4 per cent, with housing rentals declining and housing maintenance and repair costs rising only slightly.

Food prices eased to 1.3 per cent last month, down from the 1.6 per cent in March, as the prices of prepared meals and non-cooked food items registered a smaller rise.

Core inflation is expected to come in near the mid-point of the forecast range of 1 per cent to 2 per cent this year.

Overall inflation is expected to average 0.5 per cent to 1.5 per cent.