Chart of the Day: See how Singapore’s CPI is nearing a 4-year low

It is a bit of a surprise.

Singapore’s headline CPI unexpectedly moderated to 0.6% y-o-y in September, with prices contracting by 0.1% m-o-m nsa on a sequential basis.

According to HSBC, although the deceleration has somewhat surprised markets, under the surface it was mostly driven by a one-off implementation of healthcare subsidies, resulting in a 0.2% m-o-m nsa decline in services costs. 

HSBC adds that this caused core CPI to decelerate to a 7-month low of 1.9% y-o-y from 2.1% in August. Outside of healthcare, we see a mostly mixed picture, but on the margin it seems that core inflation momentum slowed in September.

Here’s more from HSBC:

September headline CPI decelerated to 0.6% y-o-y (Bbg: 0.9%, Prior: 0.9%), while on a sequential basis, CPI decreased 0.1% m-o-m nsa (Bbg: 0.2%, Prior: 0.5%).MAS-style core inflation, which excludes housing and transportation, decelerated to a seven-month low of 1.9% y-o-y in September from a prior reading of 2.1% in August.

By component, the main drag came from the dental and medical subcomponents, where prices declined -4.5% and -1.7% m-o-m nsa due to the introduction of new healthcare subsidies. The accommodation sector continued its moderation and contracted by 0.2% m-o-m, while private transportation prices sequentially rebounded by 0.6% following an increase in August CoE premiums. Other services sectors are mixed, with communications seeing a sequential pickup while recreation and education prices moderated.