Politics

Singapore core inflation negative for fifth straight month, at -0.2% in June


Thu, Jul 23, 2020 – 1:00 PM

SINGAPORE’S core inflation stayed negative for the fifth straight month in June at -0.2 per cent year on year, unchanged from May, according to the Department of Statistics consumer price index (CPI) figures on Thursday.

Headline inflation saw its third month in negative territory at -0.5 per cent year on year, compared with -0.8 per cent in May, mainly due to a smaller decline in private transport costs.

Private transport costs fell 4.4 per cent in June, slowing from May’s 6.8 per cent decline. Accommodation inflation stayed positive and unchanged at 0.5 per cent.

Core inflation, which excludes accommodation and private road transport, stayed steady as a steeper drop in the cost of services was offset by higher food inflation, as well as smaller declines in the costs of retail and other goods, and electricity and gas.

Services costs fell 1 per cent, steepening from May’s 0.8 per cent fall, due to larger estimated declines in holiday expenses and airfares amid the pandemic.

In contrast, food was the only core inflation category where inflation was positive, edging up to 2.3 per cent, from 2.2 per cent in May.

The cost of retail and other goods declined 1.8 per cent, slowing from May’s 2.3 per cent, due to a more gradual fall in prices of clothing and footwear, and telecommunications equipment.

Electricity and gas prices fell 3.9 per cent, slowing from the 4.6 per cent fall in May, as new subscriptions under the Open Electricity Market scheme slowed.

In a joint statement, the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry maintained the exact same inflation outlook as in the previous month, expecting inflation to remain subdued.

“In the quarters ahead, external sources of inflation are likely to remain benign amid weak global demand conditions,” they said, with oil prices to stay low though Covid-19-related supply chain disruptions could continue to put upward pressure on imported food prices.

At home, subdued economic sentiment and labour market weakness will dampen consumer demand. “Cost pressures are likely to remain low as some degree of spare capacity in the economy emerges,” they said.

The official full-year forecast range for both core and headline inflation in 2020 remained at between -1 per cent and zero.

Economists have been expecting the MAS to hold foreign exchange policy steady at its next policy meeting in October.





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