February inflation slightly eases to 4.6%

Food prices hit a seasonally expected dip but accomodation costs keep shooting up.

It was the first time in months that food prices fell, which led to the decline of inflation from its 4.8% perch in January despite rising rentals, said the Monetary Authority of Singapore (MAS) and Ministry of Trade and Industry Singapore (MTI).

Here's more from MAS and MTI:

CPI-All Items inflation edged down from 4.8% in January 2012, largely on account of lower contributions from food prices and services fees. Food inflation moderated from 3.8% y-o-y in January 2012 to 2.6% in February. This was due to the seasonal decline in non-cooked food prices following the Chinese New Year.

Services inflation also eased slightly to 3.0%, partly reflecting the fall in the cost of holiday travel. In addition, domestic helpers’ salaries, which had risen sharply in H1 2011, registered a more moderate increase on a y-o-y basis.

However, a slightly sharper gain in car prices compared to a year ago provided a partial offset to the lower contributions from food prices and services fees. Similarly, the increase in CPI less imputed rentals on owner-occupied accommodation (OOA) slowed to 3.3%.

Accommodation cost rose by 10% y-o-y and remained the single largest contributor to CPI-All Items inflation. The owner-occupied accommodation (OOA) sub-group, which has a 15.6% weight in the CPI basket, contributed 1.8% points to CPI-All Items inflation in February. This reflected the higher rentals in new and renewed leasing contracts.

Inflation as measured by CPI less imputed rentals on OOA (CPI-ex OOA) was lower at 3.3% in February compared to 3.5% in January.

MAS Core Inflation moderated to 3.0% in February 2012. Excluding the costs of accommodation and private road transport, MAS Core Inflation slowed from 3.5% in January 2012 to 3.0% in February.

Overall food prices fell for the first time in nearly a year, on account of lower prices of non-cooked food items such as seafood, vegetables and meat & poultry after the Chinese New Year. However, prepared meal prices edged up by 0.1% as pricier hawker fare more than offset
cheaper fast food.

Holiday travel was cheaper as demand eased following the Chinese New Year. However, this was partially offset by fee increases for medical treatment and childcare services. LPG and gas tariffs were raised in line with the earlier increase in global fuel prices. Retail-related items, such as clothing & footwear, were slightly more expensive following the end of price promotions held over the Chinese New Year period.

Car prices declined, reflecting the correction in the COE premiums in January as buying interest was lower during the school holidays in December. The increase in accommodation cost eased from 2.7% in January to 0.6% in February, with the former exacerbated by the government’s disbursement of S&CC and rental rebates in December 2011. Meanwhile, leasing contracts continued to be reset at higher rental values, which led to further increase in both actual rented accommodation cost and imputed rentals on owner-occupied accommodations.