Consumer Price Developments in February 2019

In February 2019, MAS Core Inflation eased to 1.5% on a year-on-year (y-o-y) basis, from 1.7% in January, due to smaller increases in the costs of services, retail items and electricity & gas.1 Despite lower core inflation, CPI-All Items inflation edged up to 0.5% y-o-y, from 0.4% in the previous month, due to more gradual declines in private road transport and accommodation costs. CPI-All Items inflation came in higher at 0.5% y-o-y in February CPI-All Items inflation picked up slightly to 0.5% y-o-y in February, from 0.4% in January, mainly on account of more gradual declines in private road transport and accommodation costs, which outweighed lower inflation for services, retail items and electricity & gas. Private road transport costs decreased by 2.3% y-o-y in February, less than the 3.4% drop in the preceding month, due to smaller declines in both car and petrol prices. Accommodation costs fell by 1.6% y-o-y in February, slower than the 1.9% decline in the previous month. This was due to a more gradual fall in housing rentals, as well as a larger increase in the cost of housing maintenance & repairs. Food inflation came in at 1.4% in February, unchanged from the preceding month, as a larger increase in the prices of prepared meals was offset by a smaller rise in the prices of non-cooked food items. The cost of electricity & gas rose at a slower pace of 5.5% y-o-y in February compared to the 6.5% increase in January. This reflected the effect of the phased nationwide launch of the Open Electricity Market (OEM) on electricity prices. The overall cost of retail items rose by 1.1% y-o-y in February, easing from the 1.4% increase recorded in January, mainly on account of a smaller rise in the prices of clothing & footwear. Services inflation moderated to 1.5% y-o-y in February, from 1.7% in the previous month. This was due to a slower pace of increase in education services fees as well as airfares. CPI less imputed rentals on owner-occupied accommodation (CPI-ex OOA) inflation picked up to 1.0% y-o-y in February Inflation as measured by CPI less imputed rentals on owner-occupied accommodation (OOA) rose slightly to 1.0% y-o-y in February, from 0.9% in the preceding month, as the more gradual pace of decline in private road transport costs outweighed the smaller increases in the costs of services, retail items and electricity & gas.

Outlook External sources of inflation have receded as global oil prices fellsharply in Q4 2018, mainly on oversupply concerns. As a result, global oil prices are expected to be lower this year compared to 2018. On the domestic front, supportive labour market conditions should underpin wage growth and continuing price pressures. However, the extent of overall price increases will be capped by greater market competition in several consumer segments, such as telecommunications, electricity and retail. In 2019, MAS Core Inflation and CPI-All Items inflation are projected to be in the ranges of 1.5�2.5% and 0.5�1.5%, respectively. MONETARY AUTHORITY OF SINGAPORE MINISTRY OF TRADE AND INDUSTRY

Source: Monetary Authority of Singapore