Core inflation fell in October in Singapore

Core inflation fell in Singapore in October

Consumer prices in Singapore deepened their decline in October as core inflation fell, even as authorities forecast a “mildly positive” turn in 2021.

Core inflation fell to -0.2 percent year-on-year in October, compared with -0.1 percent in September, data from the Monetary Authority of Singapore (MAS) and Ministry of Trade and Industry (MTI) showed on Monday.

MAS’s core inflation measure excludes accommodation and private transport.

Overall consumer price index (CPI)-all items inflation, which includes both components, fell to -0.2 percent year-on-year last month, compared with 0 percent in September.

The inflation figures came as the trade and industry ministry said Singapore’s economy was expected to shrink between 6 percent and 6.5 percent this year, after a smaller-than-expected 5.8 percent contraction in the third quarter.

The fall in core inflation was mainly driven by steeper declines in the costs of services and retail and other goods, as well as lower food inflation, MAS and MTI said in a joint news release.

core inflation breakdown

Services costs fell by -0.5 percent on account of lower telecommunication services inflation and a larger decline in tuition and other fees.

Retail and other goods declined -1.6 percent after telecommunication equipment costs and prices of recreational goods dropped. Prices of household supplies also rose at a more gradual pace, said MAS and MTI.

Food inflation edged down to 1.7 percent in October, as prices of non-cooked food grew at a more moderate pace.

Private transport costs saw a larger drop of -1.3 percent in October, compared to -0.1 percent in September. This was attributed to car prices rising at a more gradual pace, and fuel costs declining more sharply

MAS and MTI retained their outlook from September on external inflation remaining low, amid weak demand in key commodity markets and “the persistence of negative output gaps” in Singapore’s major trading partners.

Cost pressures are expected to stay subdued on the domestic front, with “accumulated slack” in the labor market weighing on wages.

“Nevertheless, core inflation is forecast to turn mildly positive in 2021, as the disinflationary effects of government subsidies introduced this year fade and demand for some domestic services gradually pick up,” said MAS and MTI.

Accommodation costs are expected to continue falling due in part to a decline in foreign employment, while private transport costs should rise modestly ahead of an anticipated reduction in Certificate of Entitlement supply next year.

The agencies’ projections of core inflation and overall inflation remained unchanged from last month, at between -0.5 and 0 percent in 2020.

Source: Channel Asia

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