S'pore inflation rate edges up 2% on-year in August

SINGAPORE: Singapore's headline inflation rate edged up to 2.0 per cent year-on-year in August, up from 1.9 per cent in July.

The Monetary Authority of Singapore (MAS) said the higher CPI-All Items inflation was due to higher costs of accommodation, services and food, which was partly offset by the smaller gain in private road transport cost.

August's headline inflation rate, which represented the fourth straight month of increase, is in line with economists' forecasts.

Accommodation cost was the key contributor in August, increasing by 4.2 per cent compared to 2.6 per cent in July. This was due to a disbursement of service & conservancy charges (S&CC) rebates for HDB households in July.

MAS said imputed rentals on owner-occupied accommodation (OOA) contributed 0.7 percentage point to overall inflation, down slightly from 0.8 percentage point in July, reflecting softer conditions in the housing rental market.

Services inflation picked up slightly to 2.7 per cent in August from 2.5 per cent a month earlier, led by a stronger rise in cable TV charges and tertiary education fees. Food prices increased by 2.4 per cent in August, up from 2.1 per cent in July, mainly due to costlier hawker and restaurant meals.

Meanwhile, private road transport cost saw a smaller gain of 0.1 per cent in August. It had rose 2.0 per cent in the previous month. This was due to a drop in car prices in August. Petrol pump prices rose at a more moderate pace, in line with the recent trend in global oil prices.

MAS Core Inflation, which excludes the costs of accommodation and private road transport, rose to 1.8 per cent in August from 1.6 per cent in July due to slightly higher contributions from food and services.

MAS said overall imported inflation will remain generally subdued for the year. However, domestic cost pressures are expected to persist given the continuing tightness in the labour market. It therefore expects a slight pick up in the pass-through from accumulated cost increases to prices of consumer services.

MAS Core Inflation is expected to rise moderately for the rest of the year and average 1.5 to 2.5 per cent in 2013.

Meanwhile, MAS expects imputed rentals on OOA to likely continue to increase at a slower pace over the rest of the year as more housing units come on-stream. However, COE premiums could be volatile over the short-term, in light of the recently announced motor vehicle-related policy measures.

For 2013, CPI-All Items inflation is expected to be 2 to 3 per cent.

Source: CNA

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S'pore inflation rate edges up 2% on-year in August

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