Consumer prices in Singapore rise for fourth straight month in March

SINGAPORE — Consumer prices rose for the fourth consecutive month in March, again mainly led by the increase in private road transport costs.

The All-Items Consumer Price Index (CPI) rose 0.7 per cent last month from March a year earlier, said the Monetary Authority of Singapore (MAS) and Ministry of Trade and Industry (MTI) in a joint statement on Monday (April 23). The increase in headline inflation - at the same pace as in February - was also in line with forecasts from economists in a Reuters poll.

Private road transport inflation eased to 6.9 per cent from 7.1 per cent in February, as the faster pace of increase in car and motorcycle prices was offset by the smaller pickup in petrol prices, the MAS and MTI said. Services inflation edged up to 1.6 per cent in March from 1.5 per cent a month earlier, while food inflation was unchanged at 1.3 per cent.

Meanwhile, accommodation costs fell by 4 per cent in March, the same rate of decline as in the previous month, amid continued softness in the housing rental market.

MAS core inflation - which excludes the costs of accommodation and private road transport - was at 1.2 per cent in March, unchanged from the previous month, as price changes in the core components of the CPI basket were broadly stable, the MAS and MTI said. The official forecasts for headline and core inflation for 2017 have been maintained at 0.5 to 1.5 per cent and 1 to 2 per cent, respectively.

"Headline inflation has and will continue to edge up on the back of increases in energy-related costs and administered prices. Nonetheless, demand-pull pressures and core inflation, by implication, should remain muted given the subdued labour market," said ANZ economist Ng Weiwen.

In the statement on Monday, the MAS and MTI noted that external inflationary pressures have picked up amid a turnaround in global commodity markets.

"Administrative price adjustments (rise in car park charges and household refuse collection fees, as well as upcoming increases in water prices, and service and conservancy charges) will also contribute to a temporary increase in inflation this year. Overall, domestic sources of inflation remain relatively muted," they added.

The MAS and MTI added that the conditions in the labour market have slackened and this is expected to dampen underlying wage pressures, while commercial and retail rents have eased. "The subdued economic environment will also limit the extent to which businesses pass on higher import and administrative costs to consumers," the MAS and MTI said.

The current conditions are unlikely to trigger any monetary policy adjustments in the near term, economists said.

"In the April MAS monetary meeting, the central bank maintained its neutral Singapore dollar nominal effective exchange rate policy stance while reiterating that the existing policy stance is 'appropriate for an extended period and should ensure medium-term price stability'," said UOB economist Francis Tan.

"This shows that the central bank is not expecting runaway prices and that although current economic conditions are better than just a year ago, the weakness in the labour market will set a limit on cost-pushed inflation. With that, we think that the current dovish policy stance will remain even in the upcoming October meeting," he added.

Likewise, Mr Ng expects monetary policy to remain "rooted" in the medium-term domestic economic restructuring despite the recent improvement in external conditions.