Singapore headline CPI inflation falls for 21st month, declines in housing and transportation costs weigh

Singapore headline CPI inflation fell 0.7 percent y/y in July, the same as in June. The fall was more than median forecast in a Reuters survey for a decline of 0.5 percent in July.

MAS core inflation eased slightly from -1.1 percent in June to -1.0 percent in July.‎ MAS reiterated that core inflation is tipped to pick up gradually over the course of the year, but will be constrained on the upside due to the tepid external outlook, sluggish growth prospects and reduced labour market tightness.

Private road transport which fell -4.4 percent y/y, ‘housing and utilities’ which were down -4.3 percent y/y as well as clothing and footwear which fell -1.8 percent y/y were the main drag on headline numbers.

"Looking ahead, with headline inflation having likely troughed in Q2 and likely to creep higher in the coming months, we maintain our full-year inflation forecast of -0.4 percent yoy. Core inflation will similarly hold around the 1 percent y/y for 2016‎, but reflect the wage growth slowing slightly over the course of the year," said Ms Selena Ling, Head of Treasury Research & Strategy, OCBC Bank.