SINGAPORE — The Singapore government has lowered its full-year inflation forecast to reflect the ongoing moderation of private road transport and accommodation costs, even as wage pressure on businesses is expected to persist.

Full-year all-items inflation rate is now projected to be 1 to 1.5 per cent, down from the 1.5 to 2 per cent in a previous forecast, the Monetary Authority of Singapore (MAS) and Ministry of Trade and Industry (MTI) said in a joint statement for the latest Consumer Price Index (CPI) data today.

“All items inflation should stay subdued for the rest of this year and throughout 2015, amid the expected increase in the supply of certificate of entitlements (COEs) and newly-completed housing units,” the statement read, adding that next year’s overall inflation should come in the range of 0.5 to 1.5 per cent.

In September, private road transport dropped 2.8 per cent after August’s 2.9 per cent drop, while the dip in accommodation costs extended from 0.2 per cent to 0.6 per cent last month.

Services inflation also slowed to 1.7 per cent in September from 2.1 per cent in August, due mainly to a lower jump in medical fees as one-off subsidies including the Pioneer Generation Package took effect. Food inflation, however, remained high at 3 per cent on the back of more expensive prepared meals.

September’s overall inflation rate came down from 0.9 per cent to 0.6 per cent – the lowest since February’s 0.4 per cent – while core inflation, which excludes private road transport and accommodation costs, slowed from 2.1 per cent to 1.9 per cent.

Noting that medical fee moderation last month was a one-off reduction, MAS and MTI cautioned that wage pressure will continue to persist amid the tight employment market.

“Wage pressures should continue to increase and filter through to prices, in particular, of various services items for which demand remains firm,” they said, but adjusted their core inflation forecast down to the 2 to 2.5 per cent range – down from 2 to 3 per cent in a previous forecast – for 2014 and 2 to 3 per cent for 2015.