Chart of the Day: Singapore CPI dropped to post Dec-2009 lows

As private road transport cost decreased by 5.6%.

CPI-All Items inflation slowed to 0.1% in October from 0.6% in September, mainly on account of base effects associated with fluctuations in car Certificate of Entitlement (COE) premiums, as well as sharper declines in the costs of accommodation and oil-related items.

According to a release by MTI, private road transport cost decreased by 5.6%, following the 2.8% fall in September, largely due to the high base a year ago.

MAS Core Inflation, which excludes the costs of accommodation and private road transport, eased to 1.7% in October from 1.9% a month ago. This was largely due to the steeper decline in electricity tariffs as well as lower food inflation.

According to DBS, this brings the year-to-date to 1.3% (headline) and 2.0% yoy (core CPI), which is close to our full-year forecasts of 1.2% and 2.0% respectively. That said, MAS-MTI remains watchful and reiterated that external price developments are expected to stay benign given ample buffers in major commodity markets, but domestic food inflation could remain elevated in the near term given the higher prices of regional food supplies. Moreover, wage pressures are expected to continue to persist and filter to various services prices, and in turn contribute to firm MAS core inflation.