Singapore's Core Inflation Eases as Businesses Refrain From Raising Prices

Drop in July driven by lower prices for retail and other goods, and electricity and gas

- Chor Khieng Yuit

Consumer price pressures eased in July as core inflation edged down to 0.5 per cent year on year, with economists saying some businesses are making the hard choice of not raising prices in the face of slowing demand.

Core inflation excludes private transport and accommodation to better reflect household expenses. July's reading was lower than the forecast of 0.6 per cent by economists in a Bloomberg poll.

In June, core inflation had come in at 0.6 per cent, unchanged from May, after it hit a four-year low of 0.5 per cent in March.

The drop in core inflation was driven by a fall in the prices of retail and other goods, as well as lower electricity and gas prices, the Monetary Authority of Singapore (MAS) and Ministry of Trade and Industry (MTI) said on Aug 25.

Meanwhile, overall inflation eased to 0.6 per cent year on year in July, from 0.8 per cent in June, due to a smaller increase in accommodation costs.

Ms Sheana Yue, an economist at Oxford Economics, said the month-on-month decline in the core inflation numbers suggests some loss of underlying demand in the economy.

She said Singapore's exports—a measure of external demand—have started to weaken on payback from the front-loading of orders to get ahead of higher US tariffs. Exports also face a tougher future with higher tariffs having taken effect in August.