SINGAPORE: Singapore's core inflation rate edged down in June from the previous month, due to lower services and retail inflation and a steeper decline in the cost of electricity and gas.
Core inflation - which excludes the costs of accommodation and private road transport - came in at 1.2 per cent year-on-year in June, said the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) in a press release on Tuesday (Jul 23).
AdvertisementAdvertisementConsumer Price Index (CPI)-All Items inflation moderated to 0.6 per cent year-on-year, from 0.9 per cent in May.
Apart from lower core inflation, this also reflected a fall in private road transport inflation and a larger drop in accommodation costs, said MAS and MTI.
The cost of private road transport rose slightly by 0.2 per cent year-on-year in June, moderating from the 1.5 per cent increase in the previous month, mainly on account of a smaller rise in car prices and a decline in petrol prices.
Services inflation eased to 1.7 per cent year-on-year in June from 2 per cent in May.
AdvertisementAdvertisementThis largely reflected smaller increases in holiday expenses and airfares, as well as a larger fall in telecommunication services fees.
The cost of electricity and gas declined by 4.8 per cent year-on-year in June, steeper than the 4 per cent drop in the preceding month.
This was due to the dampening effect of the nationwide launch of the Open Electricity Market on electricity prices.
Meanwhile, the overall cost of retail items increased by 0.4 per cent year-on-year, slightly lower than the 0.5 per cent rise in May.
The slower rate of inflation was primarily due to a larger decline in the prices of telecommunications equipment, medical products and goods for recreation and entertainment, which more than offset a faster pace of increase in the prices of personal care products as well as a smaller decline in the prices of clothing and footwear, said MTI and MAS.
Accommodation costs fell at a slightly faster pace of 1.1 per cent year-on-year in June as compared to the 1 per cent decline in the previous month, while food inflation remained unchanged from May at 1.4 per cent.
External sources of inflation are "likely to be benign" for the rest of the year, said MAS and MTI.
"An acceleration in inflationary pressures is unlikely against the backdrop of slower GDP growth, uncertainties in the global economy, as well as the continuing restraining effects of MAS’ monetary policy tightening in 2018," said the two bodies.
They expect core inflation to come in near the mid-point of the forecast range of 1 to 2 per cent in 2019.
Private road transport costs could pick up slightly this year as compared to last year, while accommodation costs are likely to decline at a slower pace this year, they added.
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