Singapore inflation up 0.2% on year in Dec, 2016 inflation at -0.5%

SINGAPORE inflation rose to 0.2 per cent on year in December 2016 from 0.0 per cent in November, due to a stronger pickup in the cost of private road transport.

In a joint release, the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) said on Monday that private road transport cost increased by 1.7 per cent in December, following the 0.2 per cent rise in November, as a result of higher petrol prices and car park fees. The Housing Development Board (HBD) and Urban Redevelopment Authority (URA) raised public car park charges for short-term and season parking schemes, with effect from December 1, 2016.

Services inflation edged up to 1.6 per cent in December from 1.5 per cent in November, mainly on account of a faster pace of increase in holiday expenses, which more than offset the larger contraction in telecommunication services fees.

Food inflation was 2.0 per cent in December, unchanged from Nov. Price increases for non-cooked food items and prepared meals were broadly stable.

Accommodation cost fell by 3.8 per cent in December, similar to the previous month, reflecting continued softness in the housing rental market.

Overall retail goods inflation eased to 0.0 per cent in December from 0.2 per cent in November, largely on account of a fall in the prices of personal care products following the rise in November.

For the whole of 2016, consumer price index (CPI)-All Items inflation came in at -0.5 per cent for the second consecutive year.

MAS Core Inflation - which excludes "accommodation" and "private road transport" - was 1.2 per cent in December, slightly lower than the 1.3 per cent in November, as the decline in retail goods inflation more than offset the increase in services inflation.

MAS Core Inflation for 2016 rose to 0.9 per cent, from 0.5 per cent the year before.

For the whole of 2017, MAS Core Inflation is expected to average 1-2 per cent, compared with 0.9 per cent in 2016.

Energy-related components are projected to contribute positively to inflation in 2017, while the temporary disinflationary effects from budgetary measures will fade. However, the increase in core inflation will be gradual, given the absence of more generalised demand-induced price pressures.

CPI-All Items inflation is projected to pick up to 0.5-1.5 per cent this year, from -0.5 per cent in 2016, largely reflecting the rise in private road transport cost.

The cost of private road transport is projected to rise in 2017, largely as a result of the expiry of the road tax rebate for petrol vehicles, the upward revision of car park charges with effect from December 1, 2016, and higher petrol prices.