SINGAPORE – Core inflation eased in March on the back of smaller increases in the costs of retail items and electricity and gas, which more than offset higher services and food inflation, according to data released on Tuesday (April 23).
Core inflation – which strips out private transport and accommodation costs – eased to 1.4 per cent on a year-on-year basis in March. This was slightly lower than the 1.5 per cent in February.
However, overall inflation rose to 0.6 per cent year on year in March, from 0.5 per cent in February.
“The slight uptick in inflation was due to higher services and food inflation, as well as more modest declines in private road transport and accommodation costs, which outweighed the smaller increases in the costs of retail items and electricity and gas,” said the Ministry of Trade and Industry (MTI) and the Monetary Authority of Singapore (MAS) in a joint statement.
Both figures came in lower than expected, with analysts polled by Bloomberg predicting 1.7 per cent for core inflation and 0.7 per cent for overall inflation.
MAS said in its half-yearly review earlier this month that it will maintain the rate of appreciation of the Singapore dollar. It uses the exchange rate as its main monetary policy tool to strike a balance between inflation from overseas and economic growth.
It had also downgraded its 2019 forecast range for core inflation to 1 per cent to 2 per cent, down from between 1.5 per cent and 2.5 per cent previously. The figure is expected to come in near the mid-point of the revised range.
In March, the overall cost of retail items inched up by 0.1 per cent year on year, lower than the 1.1 per cent increase in February. MAS and MTI noted that the lower rate of inflation was due to smaller increases in the prices of clothing and footwear and personal care products, as well as a decline in the cost of household durables. The effect of the higher tobacco excise duty introduced in February last year also dissipated in March this year.
The rose by 3.9 per cent compared with March last year, lower than the 5.5 per cent increase in February.
“This reflected the dampening effect of the phased nationwide launch of the Open Electricity Market (OEM) on electricity prices,” MAS and MTI said.
Food inflation picked up, to 1.6 per cent year on year in March, from 1.4 per cent in the preceding month, due to a faster pace of increase in the prices of prepared meals and non-cooked food items.
Services inflation rose to 1.7 per cent year on year, from 1.5 per cent in February. MAS and MTI said: “This was mainly because of higher inflation for holiday expenses, coupled with a smaller decline in telecommunication services fees.”
Private road transport costs dipped by 0.9 per cent year on year in March, less than the 2.3 per cent decrease in the preceding month, on account of a more gradual decline in car prices and also a rise in petrol prices following an earlier drop.
Accommodation costs also fell at a more moderate pace, of 1.4 per cent year on year in March, compared to the 1.6 per cent decline in the previous month, as the fall in housing rentals eased.