S'pore inflation dips 1.8% in June on smaller rise in car costs

SINGAPORE - A smaller rise in car prices helped lower Singapore's inflation rate to 1.8 per cent last month from 2.7 per cent in May, data from the Singapore Department of Statistics showed on Wednesday.


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Here are excerpts from a joint statement from the Monetary Authority of Singapore and Ministry of Trade and Industry:

Consumer Price Developments in June 2014

CPI-All Items inflation came in lower at 1.8 per cent y-o-y in June

CPI-All Items inflation fell to 1.8 per cent in June from 2.7 per cent in May, mainly on account of a more moderate increase in car prices. Contributions from other major categories, except food, were also slightly lower.

Private road transport cost edged up by 2.8 per cent in June, a smaller rise compared to the 8.1 per cent surge a month earlier, largely due to the sharp correction in COE premiums in May.

Accommodation cost increased at a slower pace of 0.5 per cent compared to 0.9 per cent in May, as imputed rentals on owner-occupied accommodation (OOA) picked up more modestly.

Services inflation eased to 2.2 per cent from 2.5 per cent in the preceding month, owing to lower contributions from the cost of holiday travel, telecommunication and medical insurance.

Food inflation came in at 3.2 per cent, higher than the 3.0 per cent a month ago, reflecting steeper price increases of both non-cooked food items and prepared meals.

CPI less imputed rentals on owner-occupied accommodation (CPI-ex OOA) rose at a slower pace of 2.2 per cent in June

Inflation as measured by CPI less imputed rentals on OOA moderated to 2.2 per cent in June from 3.1 per cent in May, largely on account of the lower contribution from private road transport cost.

MAS Core Inflation eased to 2.1 per cent in June

MAS Core Inflation, which excludes the cost of accommodation and private road transport, inched down to 2.1 per cent in June from 2.2 per cent a month ago, as the steeper increase in food prices was more than offset by the decline in services inflation.

Outlook

External price developments should be relatively benign for the rest of the year, notwithstanding some volatility in global oil prices recently. 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 modest.

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 per cent in 2014.

CPI-All Items inflation is expected to ease in the second half of 2014 due to lower imputed rentals on OOA and car prices. For the whole year, car prices are now projected to exert a slight drag on overall inflation, given the larger-than-expected increase in car COE quotas. Consequently, CPI-All Items inflation is expected to come in at the lower half of the 1.5-2.5 per cent forecast range.

 

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