Chart of the Day: Here’s what’s dragging Singapore’s headline CPI down

Housing and utilities were the main culprit.

The usual suspects once again dragged Singapore’s headline consumer price index (CPI) down as housing and utilities costs fell by 4.1% due to sluggish rental costs and the pains of the continuously softening housing rental market.

According to Maybank Kim Eng, the accommodation sub-component alone of the segment dropped by 3.2% in February, while the fuel and utilities sub-category also posed a 10.6% drop due to lower tariff.

“Electricity tariffs were decreased by an average 4.2% for 1Q 2016 vis-a-vis 4Q 2015,” Maybank Kim Eng said.

Meanwhile, transport costs also fell by 2.9%, with its biggest component, private road transport, declining by 3.9%.

“Private Road Transport” cost declined at faster pace by -3.9% YoY (Jan 2016: -1.8% YoY). This was attributed to lower car and petrol pump prices on cheaper COE premiums as well as lower global oil prices,” Maybank Kim Eng said.

Meanwhile, Maybank Kim Eng said its prediction of a 0.5% headline inflation for 2016 still holds due to the dissipating effect of lower global oil prices.

“The positive output gap in Singapore has been gradually diminishing from the recent peak in 1Q 2014 and turned negative in 3Q 2015. The trend is putting downward pressure on inflation, a situation which we expect to persist in 2016,” Maybank Kim Eng said.