Inflation down to 1.2% in June

The fall was partially because of a steeper decline in electricity and gas prices.

Singapore’s core inflation, excluding the costs of accommodation and private road transport, edged down to 1.2% in June from 1.3% in May, according to data from the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI).

This was due to lower services and retail inflation, as well as a steeper decline in the cost of electricity and gas.

The consumer price index (CPI-All Items) inflation eased to 0.6% YoY in June, down from 0.9% in May, thanks to lower private road transport, services and retail inflation, as well as a larger decline in the costs of electricity & gas, and accommodation.

The cost of electricity & gas dipped 4.8% YoY in June due to the dampening effect of the nationwide launch of the Open Electricity Market (OEM) on electricity prices.

Services inflation also dropped to 1.7% YoY in June, from 2% in May, largely reflecting smaller increases in holiday expenses and airfares, as well as a larger fall in telecommunication services fees, the agencies explained.

Accommodation costs also fell at a slightly faster pace of 1.1% YoY in June, compared to the 1% decline in May, as a smaller increase in the cost of housing maintenance and repairs outweighed a more gradual decline in housing rentals.

Meanwhile, the overall cost of retail items edged up 0.4% YoY in June, slightly lower than the 0.5% increase in the previous month. “The slower rate of inflation was primarily due to a larger decline in the prices of telecommunications equipment, medical products, and goods for recreation & 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 & footwear,” MAS and MTI noted.

The cost of private road transport rose 0.2% YoY in June, moderating from the 1.5% increase in May, mainly on account of a smaller rise in car prices, and a decline in petrol prices.

Also read: How much petrol can the average Singaporean afford?

Food inflation stood unchanged at 1.4% YoY in June from May, as an uptick in food services inflation broadly offset a smaller increase in the prices of non-cooked food items. MoM, food prices inched up 0.2% largely due to an increase in the prices of hawker and restaurant meals. The prices of non-cooked food items also rose as a pickup in the prices of fish & seafood, vegetables, and bread & cereals more than offset a fall in the prices of fruit.

According to MAS and MTI, external sources of inflation are likely to be benign for the rest of 2019. Inflation is expected to come in near the mid-point of the forecast range of 1-2% in 2019.

“CPI-All Items inflation is expected to average 0.5-1.5% in 2019.” the agencies said, adding that private road transport costs could pick up slightly compared to 2018, whilst accommodation costs are likely to decline at a slower pace.