A sharper fall in private road transport costs, and to a lesser extent, smaller increases in the prices of services, retail items and electricity and gas, more than offset a slower pace of decline in accommodation costs, the Monetary Authority of Singapore (MAS) and Ministry of Trade and Industry (MTI) said in a press release.
Headline inflation fell to 0.3 per cent year-on-year in November, from 0.7 per cent in October.
Lower car prices due to lower Certificate of Entitlement (COE) premiums and a smaller rise in petrol prices brought about a steeper fall in transport costs, 3.6 per cent in November as compared to the 0.6 per cent decline in October.
Services inflation came in lower at 1.2 per cent in November, from the 1.4 per cent in the previous month.
This reflected a larger decline in telecommunication service fees and a smaller increase in holiday expenses, which outweighed a higher upturn in recreational and cultural services fees.
Overall cost of retail items went up by 1.1 per cent in November, moderating from the 1.3 per cent increase in October.
This mostly reflected lower inflation for telecommunication equipment, clothing and footwear items, household durables and medical products, which more than offset the bigger increase in personal care product prices.
Food inflation remained unchanged at 1.4 per cent, as price increases for non-cooked food items and prepared meals remained largely similar.
Accomodation costs, which declined 2.5 per cent in October, fell by 2.1 per cent in November. This is due to a more gradual fall in housing rentals, as well as a larger increase in housing maintenance and repair costs.
Looking ahead, MAS and MTI said the improving labour market should underpin a faster pace of wage growth in 2018 and 2019, compared to 2017.
“Growth in the unit labour cost for services has picked up recently,” they said. “As domestic demand strengthens further, there could be a greater pass-through of higher import and labour costs to consumer prices.
“However, the extent of overall price increases will be capped by greater market competition in several consumer segments, such as telecommunications, electricity and retail.”
However, external sources of inflation have increased in recent quarters, they added.
“Notwithstanding recent volatility, global oil prices have come in higher on a year-on-year basis, and inflation for non-oil imports has also picked up.”
MAS expects the Consumer Price Index (CPI) to rise modestly in the months ahead.
The rate is expected to come in within the forecast range of 1.5–2 per cent this year and 1.5–2.5 per cent in 2019. Meanwhile, CPI-All Items inflation is projected to be about 0.5 per cent this year, before picking up to 1 per cent to 2 per cent next year.
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