By Andy Heong
Singapore’s consumer price index (CPI)-all items inflation eased to 0.9% in August from 1.2% in July, mainly reflecting a sharper decline in private road transport cost and a more moderate increase in services fees.
In a joint statement, the Ministry of Trade and Industry (MTI) and Monetary Authority of Singapore (MAS) said private road transport cost fell by 2.9%, following the 1.6% correction a month earlier, largely due to lower certificate of entitlement (COE) premiums in July.
Petrol pump prices also rose at a slower pace of 0.7%, compared to 3.1% a month ago, on account of the recent weakness in global oil prices.
Services inflation edged down to 2.1% in August from 2.5% in the preceding month, led by more modest increases in the costs of recreation & entertainment and holiday travel.
Accommodation cost declined by 0.2% after coming in flat in July, given the soft housing rental market.
Overall food inflation was slightly lower at 2.9% compared to 3.0% a month ago, as the increase in the prices of prepared meals eased.
Non-cooked food prices, however, rose at a quicker pace of 3.4% compared to 2.8% in July, reflecting steeper price increases for seafood and vegetables.
CPI less imputed rentals on owner-occupied accommodation (CPI-ex OOA) rose at a slower pace of 1.2% in August.
Inflation as measured by CPI less imputed rentals on owner-occupied accommodation (OOA) edged down to 1.2% in August from 1.5% in July, reflecting the decline in private road transport cost and the more moderate increase in services fees.
MAS Core Inflation, which excludes the costs of accommodation and private road transport, eased slightly to 2.1% in August, from 2.2% a month ago, mainly due to the lower contribution from services costs.
On the outlook, the statement said external price developments should be relatively muted for the rest of the year, notwithstanding some uptick in imported food inflation from the region.
Supply buffers in the major commodity markets continue to be ample, and inflation in most of Singapore’s key import source countries is expected to be contained.
Domestic cost pressures, particularly stemming from a tight labour market, are likely to remain the primary source of inflation.
Taking these factors into account, MAS Core Inflation is projected to stay elevated at 2%–3% in 2014.
CPI-All Items inflation is expected to remain subdued for the rest of 2014 due to the continued drag from imputed rentals and car prices.
For the whole year, CPI-All Items inflation is projected to come in at 1.5%–2.0%.
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