Chart of the Day: Is Singapore headed for a 4th straight month of deflation?

The January rate fell further by -0.4% YoY.

Lower prices in fuel-and-energy related items such as petrol pump prices and electricity tariffs as well as lower food and services inflation sent Singapore’s CPI spiraling downward.

According to a report by Maybank Kim Eng, headline inflation rate in Jan 2015 fell further by -0.4% YoY (Dec 2014: -0.1% YoY).

From the previous month, headline inflation fell -0.2% MoM (Dec 2014: -0.2% MoM).

Core inflation rate (CPI ex-accommodation and private road transport) eased to +1.0% YoY (Dec 2014: +1.5% YoY). Food prices increase also eased to +2.2% YoY in Jan 2015 (Dec 2014: +2.7% YoY) after the high base in Jan 2014 that was in conjunction with high demand during Lunar New Year festive period.

Maybank KE revised its inflation forecast in 2015 to 0%-1.0% range from 1.0% previously on subdued inflation. This is on the back of tame inflation outlook reflecting subdued “Transport” cost given the low crude oil price effect on fuel prices, the continued depressed “Housing” cost as well as stable-to-soft global commodity prices offsetting the labour cost impact of the tight job market. This is further supported by lower electricity tariffs starting Jan 2015 which averages -8.0% QoQ in 1Q 2015 and Budget 2015’s measures to alleviate living costs