SINGAPORE: Singapore’s core inflation gauge fell to its lowest level in more than a decade in July, official data showed on Monday, amid soft consumer spending due to the coronavirus pandemic and a steep fall in electricity prices.
The measure, which strips out more volatile indicators and is closely watched by the central bank, fell to minus 0.4% year-on-year, hitting its lowest level since January 2010, according to official data.
Economists polled by Reuters had expected a fall to minus 0.3% in the core consumer price index.
Headline inflation also dropped to minus 0.4% year-on-year, data from the trade ministry and the Monetary Authority of Singapore (MAS) showed, compared with economists estimates for a sharper fall to minus 0.65%.
Authorities in the city state, battling its deepest ever recession due to the pandemic, expect both core and headline inflation to average between minus 1% and 0% in 2020.
OCBC Bank’s head of treasury research and strategy Selena Ling said the outlook remains tepid with reflationary pressures possibly not re-emerging until next year.
“Subdued consumer sentiments amid the soft labour market conditions, coupled with existing slack in the Singapore economy, should keep prices capped as firms find it difficult to pass on costs to end-consumers just yet,” said Ling.
The MAS eased monetary policy in March and is next due to review its stance in October. MAS chief economist Ed Robinson said earlier this month its policy “stance remains appropriate including and forestalling a broadening or deepening of disinflationary pressures”.
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