Singapore CPI eases for 20th straight month, likely to rise in coming months

Consumer prices in Singapore eased for the 20th straight month in a row during the month of June as prices of housing and road transport declined following government rebates on home prices that cut housing maintenance-related costs. However, inflation is expected to recover in the months ahead.

Consumer prices slid 0.7 percent year-on-year in June, slower than the 1.6 percent decrease seen in May. Accommodation costs decreased 3.5 percent compared to a 6 percent drop in May. Private road transport cost fell 5.7 percent after easing 7.6 percent, data released by the Department of Statistics showed Monday.

Meanwhile, core inflation edged up to 1.1 percent from 1 percent in May, as a result of higher services inflation. On a monthly basis, overall consumer prices rose 0.7 percent, in contrast to May's 0.7 percent decrease. Core inflation was zero percent compared to a 0.1 percent fall in the previous month, data showed.

"Actual and imputed rental costs continued to fall amid the soft housing market," a joint release from the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry showed Monday.

In addition, Service & Conservancy Charges (S&CC) rebates, which affect housing maintenance and repair cost, were disbursed in April, July and October last year, and will be disbursed in May, July and October this year, that will weigh on consumer prices.

However, MAS core inflation is expected to pick up in the coming months as the effects of low crude oil prices as well as budgetary and other disinflationary pressures are expected to ease in the near term, the joint release stated.

Meanwhile, we foresee consumer inflation to register around -1.0-0.0 percent in the coming months.