Core inflation stable as retail, food costs rise

Last month's core inflation remained stable as higher retail and food inflation offset a steeper decline in the prices of electricity and gas, according to data released yesterday.

Core inflation, which strips out private road transport and accommodation costs, came in at 1.3 per cent year on year in May, unchanged from April's figures.

However, when private road transport and accommodation costs are included, overall consumer prices rose slightly to 0.9 per cent last month. This is up from 0.8 per cent in April, said the Ministry of Trade and Industry (MTI) and the Monetary Authority of Singapore (MAS) in a joint statement.

Analysts polled by Bloomberg had expected overall inflation to ease to 0.6 per cent last month and core inflation to hit 1.3 per cent.

MAS and MTI said accommodation costs fell by 1 per cent, which reflected a slower pace of decline in housing rentals, as well as a stronger pickup in the cost of housing maintenance and repairs.

The cost of electricity and gas slipped 4 per cent, steeper than the 2.8 per cent drop in the preceding month. This was due to the dampening effect of the phased nationwide launch of the Open Electricity Market on electricity prices.

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However the cost of private road transport rose by 1.5 per cent last month, higher than the 1.1 per cent increase in April, mainly on the back of a steeper rise in car prices which more than offset a smaller increase in petrol prices.

The overall cost of retail items also recorded a larger 0.5 per cent year-on-year increase last month compared with the 0.2 per cent rise in April.

Food inflation was up 1.4 per cent in May, largely due to a faster pace of increase in the prices of prepared meals.

Services inflation was 2 per cent last month, unchanged from April, as a stronger pickup in holiday expenses was offset by a larger decline in the cost of telecommunication services fees as well as smaller increases in airfares and recreational and cultural services fees. - THE STRAITS TIMES