SINGAPORE: Singapore's core inflation dropped 0.2 per cent year-on-year in June, the Monetary Authority of Singapore (MAS) and Ministry of Trade and Industry (MTI) said in a joint news release on Thursday (Jul 23).
The drop in June continues from the 0.2 per cent year-on-year decrease recorded in May. This is the fifth straight month of year-on-year decline for the country's core inflation.
AdvertisementAdvertisementCore inflation – a key policy consideration for MAS – excludes the price of private transport and accommodation.
A steeper drop in the costs of services was offset by higher food inflation and smaller declines in the costs of retail and other goods, and electricity and gas in June, said MAS and MTI.
The headline consumer price index (CPI) or overall inflation fell 0.5 per cent year-on-year in June, easing from the 0.8 per cent decline in May.
This mainly reflected a smaller drop in private transport costs, which fell 4.4 per cent in June compared to 6.8 per cent in May.
AdvertisementAdvertisementThis in turn was due to smaller declines in car and petrol prices, said the agencies.
[h=3]READ: Some ERP charges to resume for first time since COVID-19 circuit breaker[/h]The cost of retail and other goods also registered a smaller decline of 1.8 per cent in June, compared to 2.3 per cent in May.
This was due to the prices of clothing, footwear and telecommunications equipment falling at a more gradual pace, said MAS and MTI.
On a year-on-year basis, food inflation edged up 2.3 per cent in June, compared to 2.2 per cent in May. This came on the back of a larger increase in the prices of non-cooked food items.
Meanwhile, electricity and gas costs in June fell at a slower rate of 3.9 per cent, compared to 4.6 per cent in May.
This was due to take-up rates for the Open Electricity Market continuing to dampen, the agencies said.
Accommodation inflation was unchanged at 0.5 per cent, as housing rents increased at a steady pace.
Services costs fell more steeply at 1 per cent in June, compared to 0.8 per cent in May. This was due to larger declines in holiday expenses and airfares, MAS and MTI said.
[h=3]READ: S$45 million tourism campaign launched urging locals to explore Singapore[/h]INFLATION TO REMAIN SUBDUED
MAS and MTI expected inflation to remain subdued, and maintained their forecast of MAS Core Inflation and CPI?All Items inflation averaging between -1 per cent and 0 per cent in 2020.
The agencies said external sources of inflation were likely to "remain benign" amid weak global demand conditions. Oil prices should stay low for an extended period, weighing on the prices of energy-related components of the CPI basket.
However, supply chain disruptions associated with international measures to contain the COVID?19 pandemic could continue to put some upward pressure on imported food prices, they said.
In Singapore, subdued economic sentiment and weak labour market conditions will dampen consumer demand. This will cap price increases for discretionary goods and services, the agencies said.
Cost pressures are likely to remain low as some degree of spare capacity in the economy emerges, they added.
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