SINGAPORE (The Straits Times/ANN): Core inflation in Singapore slowed sharply in January to a four-year low on the back of a steeper fall in the prices of goods, lower services inflation as well as a rebasing of the consumer price index (CPI), according to official data released on Monday (Feb 24).
Looking ahead, economic uncertainty, including the effects of the coronavirus outbreak, will likely discourage firms from passing on any cost increases to consumers, the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) said in a report commenting on the data.
Core inflation, which excludes the costs of accommodation and private road transport, came in at 0.3 per cent on a year-on-year basis last month, lower than the 0.6 per cent recorded in December 2019.
Overall inflation stood at 0.8 per cent in January, unchanged from the previous month.
Both figures missed the industry forecasts by analysts in a Bloomberg poll, which pegged core inflation and overall inflation to come in at 0.9 per cent.
But MAS and MTI noted that part of the fall in core inflation also reflected the impact of the CPI rebasing to 2019 from 2014.
The rebasing is done once every five years to reflect the latest consumption pattern of resident households. It includes changes to the weights as well as the sample of items and outlets selected for the compilation of the CPI.
MAS and MTI said overall inflation figures remained consistent as higher private transport inflation and an increase in accommodation cost were offset by lower inflation in the core inflation basket.
They forecast that in the quarters ahead, external sources of inflation are likely to remain benign amid weak demand conditions and generally well-supplied food and oil commodity markets.
On the domestic front, labour market conditions continued to soften slightly, which could lead to a moderation in unit labour cost growth this year.
"At the same time, economic uncertainty, including the effects of the Covid-19 outbreak, will likely discourage firms from passing on any cost increases to consumers," they said.
They expect inflationary pressures to remain subdued in the near term and they will closely monitor price trends in the coming months, including the impact of the rebasing of the CPI on inflation rates. - The Straits Times/Asia News Network
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