Private road transport costs drag Singapore inflation to 0.4 percent

Singapore's consumer price index (CPI) moderated in August due to lower inflation was seen in private road transport and food segments.

Singapore launches shuttle bus service between Changi Airport, Tanah Merah Ferry Terminal
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Consumer prices in the month of August have moderated based on the latest figures by the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI).

According to their joint press release, the consumer price index (CPI) for all items moderated from 0.6 percent to 0.4 percent in the said month, reflecting the slump in private road transport costs.

Also read: Singapore: Petrol, medical goods spur 1.8% growth in retail sales

From 3.5 percent in July, private road transport inflation recorded a 2.6 percent inflation in August. This was due to the dissipation of the base effect associated with the expiry of the one-year road tax rebates in August 2016. This outweighed the steeper improvement in petrol prices and the slight decline in car prices

The two governing bodies also observed that food and retail inflation eased during the same period. The 1.2 percent inflation in the segment was due to the smaller uptick in the price of both non-cooked and prepared meals.

Prices of retail and other goods, which include water costs, recorded a measly 0.9 percent growth, lower than the rate of 1.2 percent the segment recorded during the previous period. The modest increases in clothing and footwear prices helped buoy the overall costs in the segment.

Meanwhile, services inflation remained unchanged last month at 1.4 percent. The lower increases seen in medical and education areas offset the rise in holiday expenses.

MAS Core Inflation, the measure which excludes accommodation and private road transport, also moderated to 1.4 percent from 1.6 percent in July.

For the whole year, MAS Core Inflation is projected to average around one to two percent, compared with 0.9 percent in 2016. On the other hand, CPI-All Items inflation is expected to rise to 0.5–1.5 percent from -0.5 percent last year.

"The projected pickup in inflation can be attributed to the positive contribution of energy-related components and the impact of administrative price increases, rather than generalised demand-induced price pressures," MAS and MTI said.