Increasing retail prices impacted on Singapore inflation in September.

The Singapore CPI ‘All items’ declined 0.6 per cent year on year in September, compared to 0.8 per cent in August. Government officials say that change was largely down to a stronger pickup in the prices of consumer services and retail items.

The overall price of retail items was 0.6 per cent higher, reversing the 0.6 per cent drop in the preceding month, largely due to more costly clothing and footwear; and household durables. Food inflation edged down to 1.8 per cent from 1.9 per cent a month earlier, as the increase in the cost of prepared meals moderated slightly.

Services inflation rose to 0.8 per cent in September from 0.5 per cent in the previous month. This mainly reflected the rise in healthcare services fees and public road transport cost, as the dampening effects of enhanced medical subsidies and SG50-related price promotions dissipated.

MAS Core Inflation, which excludes the costs of accommodation and private road transport, picked up to 0.6 per cent in September from 0.2 per cent in August.

This mainly reflected the stronger pickup in the prices of services and retail items.  

In its outlook note, the government said external sources of inflation are likely to stay generally benign, given ample supply buffers in the major commodity markets and weak global demand conditions.

“On the domestic front, some wage cost pressures remain, but their pass-through to consumer prices will continue to be constrained by the subdued economic growth environment. MAS Core Inflation is expected to pick up gradually over the course of 2016 towards its historical average as the disinflationary effects of lower oil prices, as well as budgetary and other one-off measures dissipate,” a spokesman said.

“For the full year, MAS Core Inflation is expected to come in at 0.5 to 1.5 per cent in 2016, compared to around 0.5 per cent in 2015.”