Singapore headline inflation turns negative in April due to larger decline in private transport cost

HEADLINE inflation in Singapore turned negative in April while core inflation fell for the third straight month, amid steeper declines in the costs of services, retail and other goods, as well as public transport cost, according to official data released on Tuesday.

Headline inflation was at -0.7 per cent year on year in April, easing further from a zero figure seen in March. The Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) attributed the fall to a larger decline in the cost of private transport, in addition to the slide in core inflation.

Core inflation, which the Monetary Authority of Singapore (MAS) uses as a guide for monetary policy, fell year on year to -0.3 per cent in April, from -0.2 per cent in March.

This was due to steeper declines in the costs of services and retail and other goods. The metric excludes accommodation and private road transport costs.

Private transport costs fell more steeply to -5.5 per cent in April, from -0.3 per cent in March, reflecting a sharp drop in car prices and a larger decline in petrol prices. The suspension of Electronic Road Pricing charges in April also lowered private transport costs.

Cost of retail and other goods saw a larger decline year on year to -1.6 per cent in April, from -0.9 per cent in March. This was due to a sharp drop in the price of telecommunication equipment, as well as a bigger fall in the prices of personal effects such as travel goods.

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Accommodation costs was unchanged at 0.5 per cent year on year in April as housing rents rose at a steady pace.

The cost of electricity and gas fell 5.2 per cent year on year in April, a slower pace of decline than the 6.2 per cent drop in March. The pace of decline in the cost of electricity and gas had eased as the Open Electricity Market had a smaller dampening effect on electricity prices due to a slowdown in new take-up rates.

Food costs rose by 2.1 per cent year on year in April, from the 1.5 per cent increase in March, due to non-cooked food items recording larger price increases. Meanwhile, inflation in prepared meals remained broadly unchanged.

Services inflation fell to -1.1 per cent year on year in April and was up from -0.7 per cent in March, due to steeper declines in holiday expenses and airfares, as well as a smaller increase in domestic household services costs.

MAS and MTI are expecting both core inflation and headline inflation to remain subdued, averaging between -1 per cent and zero per cent in 2020.