Inflation rises 0.4% in Sept, in line with expectations

SINGAPORE — Consumer prices rose in line with expectations in September, as more expensive services, mainly from telecommunication fees, offset the drop in car prices.

Headline inflation rose 0.4 per cent on-year, the same pace as in August, latest figures released on Monday (Oct 23) show.

But core inflation, which excludes the costs of accommodation and private road transport, was higher at 1.5 per cent in September, faster than the 1.4 per cent in August, due to an increase in services inflation.

In line with lower Certificate of Entitlement prices, car prices fell, easing private road transport inflation to 2.1 per cent, from 2.6 per cent in August.

Amid continued softness in the housing rental market, accommodation cost fell by 3.9 per cent, an unchanged pace from August.

In a joint statement on Monday, the Monetary Authority of Singapore and Ministry of Trade and Industry, said core inflation is expected to be around 1.5 per cent for the year. For 2018, it forecasts 1 per cent to 2 per cent.

They project headline inflation at around 0.5 per cent this year, and stay in the range of zero to one per cent next year.

“Accommodation costs will continue to dampen CPI-All Items inflation (headline inflation) in 2018, albeit to a lesser extent than this year, while the positive contribution of private road transport costs will fall, in part reflecting the dissipation of inflationary effects from previous administrative measures,” they said in a release.

HSBC’s chief Asean economist Joseph Incalcaterra said the MAS’ outlook for 2018 caught his eye, adding that there were upside risks to headline inflation next year.

“Private house prices are stabilising, and while rents lag property prices, they should also stabilise in 2018. A faster-than-expected recovery in rental prices next year will push headline inflation up, and might also put upward pressures on core inflation with one to two quarter lag,” he said.