Singapore's headline inflation edges up in April, core inflation eases

HIGHER road transport costs boosted Singapore's headline inflation in April, which matched economists' expectations of 0.8 per cent and outstripped March's 0.6 per cent figure, according to consumer price index (CPI) figures released by the Department of Statistics on Thursday.

Private road transport costs were up 1.1 per cent in April, reversing March's 0.9 per cent fall.

But core inflation, which strips out housing and private transport costs, eased to 1.3 per cent year on year - also in line with economists' forecasts - from 1.4 per cent in March. This marked the third straight month in which headline inflation edged up while core inflation eased.

Higher services inflation was more than offset by a fall in electricity and gas costs, and lower food inflation. Services inflation was 2 per cent, up from 1.7 per cent the previous month, while retail costs inched up 0.2 per cent, compared to March's 0.1 per cent rise.

In contrast, food inflation slowed to 1.3 per cent, compared to 1.6 per cent in March. And electricity and gas costs fell 2.8 per cent, a reversal from March's 3.9 per cent rise. This was due mainly to lower electricity tariffs and the dampening effect of the phased Open Electricity Market rollout.

Accommodation costs fell at 1.4 per cent in April, the same pace as in March.

The Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry maintained their inflation outlook from the previous month.

"For the rest of 2019, external sources of inflation are likely to be benign," they said, noting that global oil prices have risen in recent months but are not expected to exceed last year's average for 2019 as a whole, while global food prices "should also only pick up slightly on average".

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At home, labour market conditions remain firm and will support moderate wage increases, but an acceleration in inflationary pressures is unlikely. The MAS and the MTI continue to expect core inflation for 2019 to come in near the mid-point of the official forecast range of 1 to 2 per cent, while headline inflation is expected to average 0.5 to 1.5 per cent.