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Singapore's core inflation dips slightly in Sept

This article is more than 12 months old

Singapore's core inflation came in at 1.8 per cent last month, dipping slightly from 1.9 per cent in August.

Headline inflation remained unchanged from August, at 0.7 per cent, even though the market expected the year-on-year rise in consumer prices to quicken.

Inflation came in below market expectations with analysts predicting core inflation at 1.9 per cent and headline inflation at 0.8 per cent, according to a Bloomberg poll.

Core inflation strips out accommodation and private road transport costs.

The decline in core inflation came from slower growth in retail prices of items like clothing and shoes which offset the higher price increases in services, said the Ministry of Trade and Industry (MTI) and the Monetary Authority of Singapore (MAS) in a joint statement.

Retail items rose by 1.5 per cent year on year - slowing from the 2 per cent increase previously. There was also a steeper fall in the prices of recreation and entertainment goods, and telecommunication equipment. Services, on the other hand, went up by 1.4 per cent last month, slightly higher than the 1.3 per cent in August, while food prices moderated to 1.6 per cent last month from 1.7 per cent in August.

Accommodation costs, which includes rent, fell by 2.5 per cent last month, easing from the 2.6 per cent decline in August.

Private road transport costs also fell by 0.1 per cent last month, compared with the previous month's 0.2 per cent decline.

Looking ahead, the MAS and MTI said imported inflation is likely to increase on account of higher global oil and food prices.

Imported inflation, reflected in the prices of raw materials used in Singapore such as oil, will weigh on consumer spending for the rest of this year and next year, said a Fitch Solutions macro research report. It estimates oil prices to rise from US$75 (S$103) per barrel this year to US$82 per barrel next year.

This trend will likely result in higher utilities cost and public transport fares in the future, said SIM Global Education senior lecturer Tan Khay Boon, adding that these effects will be felt more by the average household. - THE STRAITS TIMES

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