Singapore's inflation rate eases to 4.0% in October

Singapore's inflation rate eased to 4.0% in October from 4.7% the previous month 

This slower-than-expected increase in the consumer price index was mainly due to smaller gains in transportation and housing costs. 

Meanwhile, core inflation rates, which excludes transport and accommodation costs, fell to 2.2% in October from 2.4% in September. 

The Monetary Authority of Singapore (MAS) said this was due to lower contributions from food and oil-related items which more than stronger services inflation. 

In October, transport cost increases moderated to 8.3% from 10.8% the previous month, reflecting the correction in Certificate of Entitlement (COE) premiums in September.
Accommodation related cost increases also slowed to 6.8% in October from 7.7% the previous month. 

The Monetary Authority of Singapore (MAS) said the moderation was largely due to the lower base effect in September 2011 where HDB rental and service & conservancy charges (S&CC) rebates were given out . 

Together, accommodation and transportation costs account for close to two-thirds of October's inflation figures.

Food and oil-related inflation rates also saw declines. 

Food inflation slowed to 1.7% in October compared to 2.1% the preceding month, following smaller price increases in non-cooked food and prepared meals. 

Prices of oil-related items also rose at a slower pace in tandem with the moderation in global crude oil prices. 

Meanwhile, services inflation rose to 3.1% in October from 3.0% in September, due to a stronger pickup in the costs of holiday travel and household services. 

Looking forward, the Monetary Authority of Singapore (MAS) said that imported inflation will be generally benign given the continued weakness in the global economy. 

Still, the authority expects global food prices to potentially face upward pressures in the next few months and into the early part of 2013 due to weather-related supply disruptions. 

MAS added "Meanwhile the persistent tightness in the labour market will support slightly stronger wage increases in 2013, which will continue to be passed through to consumer prices." 

On the whole, MAS anticipates core inflation to be 'broadly stable' and averaging around 2.5% this year, and 2 to 3% in 2013. 

For the full year, CPI-all items inflation will remain 'elevated' in Q4 2012 and Q1 2013, reflecting significant contributions from housing and accommodation costs. 

CPI-All items inflation is likely to come in slightly above 4.5% in 2012 and ease to 3.5 to 4.5% in 2013.