Chart of the day: Singapore sees no respite from persistent deflation

Full-year inflation will remain in the red.

After six consecutive months of persistent deflation, DBS analysts now expect that Singapore's full-year Consumer Price Index (CPI) print will be negative in 2015.

DBS noted that the main drivers of the negative inflation have been record-low energy prices, a significantly smaller than expected increase in wage growth, a cooling property market, as well as moderation in healthcare costs
due to the introduction of the Pioneer Generation Package.

The report also noted that there could be more downward pressure on inflation in coming months on back of declining Certificate of Entitlement (COE) premiums.

“Barring any significant uptick in oil prices, CPI inflation will surely stay in the negative level for a few more months. In fact, chance is high that full year inflation could fall below zero. We have lowered CPI inflation for 2015 to -0.1%, down from 0.4% previously. With growth momentum likely to remain subduced and global inflationary pressure tampered by potentially higher interest rates going forward, inflation for 2016 will remain benign at 1.3%,” said DBS.