Singapore's inflation remained low in April, but that's all about the rent

Singapore's inflation remained low in April, but that's all about the rent
The Monetary Authority of Singapore (MAS)
PHOTO: The Business Times

Inflation in Singapore remained benign overall in April, data on Tuesday showed, coming in lower-than-expected, but that's largely because housing costs continued to fall.

Singapore's consumer price index (CPI) rose 0.4 per cent on-year in April, slowing from a 0.7 per cent rise in March, coming in below the 0.7 per cent expected from a Reuters poll.

That was despite the cost of electricity and gas shooting up 18.7 per cent in April, compared with a 4.2 per cent rise in March, data from Singapore's central bank, the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) showed.

Rising private road transportation costs also grew 7.0 per cent in April, as increases in car and petrol prices accelerated, the data showed.

But all of that was offset by continued declines in rents and imputed rents.

The all items less accommodation figure for April rose 2.4 per cent on-year, nearly six times the headline figure.

In the first quarter, Singapore's rental price index fell 0.9 per cent on-quarter, while property prices fell 0.4 per cent, data from the Urban Redevelopment Authority (URA) in late April showed.

The vacancy rate fell to 8.1 per cent in the quarter, from 8.4 per cent in the fourth quarter, but that's still elevated historically. The vacancy rate touched a 16-year high of 8.9 per cent touched in the second quarter of last year.

However, the core CPI figure, which excludes accommodation and private road transport, rose 1.7 per cent, faster than the 1.2 per cent rise in March.

Weiwen Ng, an economist for southeast Asia at ANZ, noted that was the fastest pace of increase since October 2014.

But Ng didn't expect that the larger-than-expected increase would affect the MAS' policy, noting the central bank said in the release that labour market conditions had slackened. Ng also noted that some of the core CPI rise was driven by administrative price increases, such as carpark charges and household refuse collection fees.

"(MAS') view that the labor market has weakened indicates that they expect generalized demand-induced price pressures to remain muted. This suggests any tilt towards policy tightening is some way off, and a neutral stance will remain for an extended period," he said in a note on Tuesday.

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