SINGAPORE: Singapore’s core inflation contracted for the seventh consecutive month in August, with authorities expecting economic challenges and a weak labour market to continue to dampen consumer demand.
Core inflation, a key policy consideration for Singapore’s central bank, fell -0.3 per cent in August from the same period last year, said the Monetary Authority of Singapore (MAS) and Ministry of Trade and Industry (MTI) said in a joint news release on Wednesday, report agencies.The gauge, which excludes the price of private transport and accommodation, had fallen -0.4 per cent in July.
The pace of decline had moderated mainly due to a smaller decline in the cost of services, retail and other goods, as well as electricity and gas, said MAS and MTI.
The headline consumer price index (CPI) or overall inflation remained unchanged at -0.4 per cent year-on-year in August after a sharper fall in private transport costs was offset by a more moderate decline in the core CPI components.
The decline in services costs came in at -0.5 per cent in August, easing from July’s -0.8 per cent. This was due to a smaller fall in point-to-point transport services costs and a larger increase in telecommunication services fees.
The retail and other goods segment also recorded a smaller decline of -1.3 per cent in August, compared with -1.6 per cent in July, as prices of clothing, footwear and recreational goods fell at a more moderate pace.
Electricity and gas costs fell at a slower rate of -14.6 per cent in August, compared with -15.2 per cent in July, due to the slowing down of new subscriptions under the Open Electricity Market (OEM).Retail electricity price plans under the OEM are generally lower than SP Group’s electricity tariff, said MAS and MTI.
“Hence, as the take‐up of OEM plans slows on a year‐on-year basis, the dampening effect of the OEM on electricity prices also declines,” they said.
Meanwhile, accommodation inflation remained unchanged in August at 0.4 per cent, while food prices rose at a slower pace of 1.8 per cent.