Inflation falls to surprise four-year low

SINGAPORE - Inflation fell more than expected to a four-year low last month, as car prices dropped from their peak and food and housing costs grew more slowly.

Consumer prices rose just 0.4 per cent last month year-on-year, compared with 1.4 per cent in January. It was the smallest increase since January 2010, data from the Singapore Department of Statistics showed yesterday.

Last month's inflation was lower than the 1 per cent that many economists had expected, leading some to cut their forecasts for this year. But they said it was a temporary respite and believe inflation will rise again in coming months.

The Monetary Authority of Singapore (MAS) is unlikely to change its approach of a gradual and modest appreciation in the Singapore dollar when the central bank meets next month, economists said.

Private road transport costs fell 7.1 per cent last month after slipping 3.5 per cent in January. This was mainly due to certificate of entitlement premiums surging last year and petrol prices dipping this year, said the MAS and Trade and Industry Ministry.

Core inflation, which excludes the costs of private road transport and accommodation, rose 1.6 per cent last month from the previous year. This was less than the 2.2 per cent increase in January and was due to a smaller rise in food and services costs.

Food inflation edged down to 2.3 per cent last month from 3 per cent in January, as the effects from pricier food during Chinese New Year in January faded.

Services fees also grew at a more muted pace of 2.1 per cent last month, down from 2.9 per cent in January.

This article by The Straits Times was published in MyPaper, a free, bilingual newspaper published by Singapore Press Holdings.

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