Electricity and gas prices surged by 16.6% compared to 13% in September.
This chart from Maybank Kim Eng shows that Singapore's core inflation in October had risen mainly due to the surge in electricity and gas prices, which rose 16.6% compared to 13% in September. Their contribution to core inflation (-0.04ppt) nearly approached the positive zone.
Brent oil prices climbed to a four-year high in the third quarter of 2018. Electricity tariffs are calculated based on oil prices in the preceding quarter, said Maybank KE analyst Chua Hak Bin.
Higher utilities prices were offset by retail and food prices. Food inflation softened to a five-month low of +1.4% in October compared to 1.6% in September with prices easing for both non-cooked food items and prepared meals.
Retail prices moderated to 1.3% compared to 1.5% in September on the back of clothing & footwear (+1.4%), personal effects and medical products.
Overall Singapore core inflation rose 1.9% from 1.8% in September. "Core inflation likely peaked in the fourth quarter and should come off in 2019," Chua said.
"We think the US-China trade war is deflationary for third countries like Singapore, as  a weaker RMB reduces prices of China-made goods;  commodity prices soften, including oil, as global capex slows; and  both US and China divert excess supply to third countries (eg. steel, soybean). A slowing Singapore economy will also contain wage cost and domestic price pressures," the analyst added.
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