SINGAPORE: Singapore’s core inflation fell to 0.5 per cent year-on-year in July, down from 0.6 per cent in June, the latest statistics showed.
The drop in core inflation was driven by a fall in the prices of retail and other goods, as well as lower electricity and gas inflation, the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) said in a joint press release on Monday (Aug 25).
July's core inflation rate was lower than the forecast rate of 0.6 per cent in a poll of economists by Reuters news agency.
It was also at its lowest since March, which was similarly at 0.5 per cent.
On a month-on-month basis, core inflation fell by 0.1 per cent in July, excluding accommodation and private transport.
Overall inflation, as measured by the Consumer Price Index-All Items (CPI-All Items), eased to 0.6 per cent in July from 0.8 per cent in June, due to a fall in accommodation inflation and lower core inflation.
On a month-on-month basis, overall inflation – which excludes non-consumption spending such as purchases of houses, shares and other financial assets and income taxes – fell by 0.7 per cent.
The Consumer Price Index is commonly used in Singapore as a measure of consumer price changes in the economy. It tracks the change in prices of a fixed basket of consumption goods and services commonly bought by the general resident households over time. The CPI-All Items provides a comprehensive overview of the prices of consumer goods and services.
In July, food inflation edged higher to 1.1 per cent year-on-year compared with 1.0 per cent in June, as the prices of food services and non-cooked food rose at a faster pace.
Private transport inflation went up to 2.1 per cent in July from 2.0 per cent in June, due to a steeper rise in car prices.
The cost of electricity and gas registered a sharper drop, from -3.9 per cent to -5.6 per cent, due to a larger decline in electricity prices.
The prices of retail and other goods declined to -0.5 per cent in July after remaining unchanged in June, because of a drop in the prices of clothing, footwear and household appliances.
Accommodation inflation fell to 0.5 per cent in July from 1.0 per cent in June, on account of smaller increases in housing maintenance and repair costs, as well as housing rents.
Services inflation was unchanged as a drop in the cost of social services and a steeper decline in outpatient care services prices were offset by a smaller decrease in holiday expenses.
MAS and MTI said that imported inflation is expected to remain moderate in the near term, as global crude oil prices have continued to ease in recent weeks, while food commodity price increases should also stay contained.
“Although the ongoing trade conflicts could be inflationary for some economies, their impact on Singapore’s import prices is likely to be offset by the disinflationary drags exerted by weaker global demand,” they added.
Domestically, unit labour costs are expected to moderate due to slower nominal wage growth and rising labour productivity.
Enhanced government subsidies for essential services will also continue to dampen inflation in the services sector.
MAS and MTI said that both core and overall inflation are projected to average between 0.5 and 1.5 per cent in 2025. However, they added that the inflation outlook in the quarters ahead is subject to both upside and downside risks.
“Geopolitical shocks could lift imported energy and shipping costs abruptly,” they added.
“Conversely, should global and domestic growth be more hesitant and weaker than anticipated, core inflation could stay low for longer.”
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The drop in core inflation was driven by a fall in the prices of retail and other goods, as well as lower electricity and gas inflation, the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) said in a joint press release on Monday (Aug 25).
July's core inflation rate was lower than the forecast rate of 0.6 per cent in a poll of economists by Reuters news agency.
It was also at its lowest since March, which was similarly at 0.5 per cent.
On a month-on-month basis, core inflation fell by 0.1 per cent in July, excluding accommodation and private transport.
Overall inflation, as measured by the Consumer Price Index-All Items (CPI-All Items), eased to 0.6 per cent in July from 0.8 per cent in June, due to a fall in accommodation inflation and lower core inflation.
On a month-on-month basis, overall inflation – which excludes non-consumption spending such as purchases of houses, shares and other financial assets and income taxes – fell by 0.7 per cent.
The Consumer Price Index is commonly used in Singapore as a measure of consumer price changes in the economy. It tracks the change in prices of a fixed basket of consumption goods and services commonly bought by the general resident households over time. The CPI-All Items provides a comprehensive overview of the prices of consumer goods and services.
SECTORS
In July, food inflation edged higher to 1.1 per cent year-on-year compared with 1.0 per cent in June, as the prices of food services and non-cooked food rose at a faster pace.
Private transport inflation went up to 2.1 per cent in July from 2.0 per cent in June, due to a steeper rise in car prices.
The cost of electricity and gas registered a sharper drop, from -3.9 per cent to -5.6 per cent, due to a larger decline in electricity prices.
The prices of retail and other goods declined to -0.5 per cent in July after remaining unchanged in June, because of a drop in the prices of clothing, footwear and household appliances.
Accommodation inflation fell to 0.5 per cent in July from 1.0 per cent in June, on account of smaller increases in housing maintenance and repair costs, as well as housing rents.
Services inflation was unchanged as a drop in the cost of social services and a steeper decline in outpatient care services prices were offset by a smaller decrease in holiday expenses.
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OUTLOOK
MAS and MTI said that imported inflation is expected to remain moderate in the near term, as global crude oil prices have continued to ease in recent weeks, while food commodity price increases should also stay contained.
“Although the ongoing trade conflicts could be inflationary for some economies, their impact on Singapore’s import prices is likely to be offset by the disinflationary drags exerted by weaker global demand,” they added.
Domestically, unit labour costs are expected to moderate due to slower nominal wage growth and rising labour productivity.
Enhanced government subsidies for essential services will also continue to dampen inflation in the services sector.
MAS and MTI said that both core and overall inflation are projected to average between 0.5 and 1.5 per cent in 2025. However, they added that the inflation outlook in the quarters ahead is subject to both upside and downside risks.
“Geopolitical shocks could lift imported energy and shipping costs abruptly,” they added.
“Conversely, should global and domestic growth be more hesitant and weaker than anticipated, core inflation could stay low for longer.”
Related:
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