2019.02.2503:29:00UTC+00Singapore Inflation Slows, Trims 2019 Forecast

Singapore's inflation slowed marginally in January, and the price growth forecast for this year was trimmed, mainly due to the outlook for lower oil prices.

Consumer price inflation eased to 0.4 percent in January from 0.5 percent rise in December, data from Monetary Authority of Singapore and the Ministry of Trade and Industry showed on Monday. In November, price growth was 0.3 percent.

Inflation slowed mainly on account of a smaller rise in the cost of electricity and gas that offset higher services price growth.

The cost of electricity and gas rose at a slower pace of 6.5 percent, after a 14.6 percent rise in December, as electricity tariffs were revised lower due to lower oil prices in the preceding months. The phased nationwide launch of the Open Electricity Market (OEM) also had an effect on electricity prices.

Food inflation was 1.7 percent, same as in December, while services price growth accelerated to 1.7 percent from 1.5 percent, mainly driven by an increase in public transport fares.

Private road transport costs declined by 3.4 percent annually in January, a moderation from the 3.7 percent in December. At the same time, accommodation costs fell by 1.9 percent in January, same as in the previous month.

MAS core inflation, which excludes the costs of accommodation and private road transport, slowed to 1.7 percent in January, from 1.9 percent in December.

The slower core inflation was mainly due to the weaker pace of growth in the cost of electricity and gas, which outweighed higher services inflation.

On a month-on-month basis, overall consumer prices fell 0.3 percent in January, reversing the 0.1 percent rise in December. Meanwhile, MAS core inflation fell to 0.1 percent from 0.3 percent a month ago.

The MAS and the ministry revised down the headline inflation forecast for 2019 to 0.5-1.5 percent from 1-2 percent, citing the outlook for lower oil prices as well as wage growth and continuing price pressures, thanks to supportive labor market conditions.

That said, the extent of overall price increases is expected to be capped by greater market competition in several consumer segments, such as telecommunications, electricity and retail.

The core inflation forecast was unchanged at 1.5-25 percent.