Inflation rate for October slows down to 0.4%

Cheaper electricity costs dragged on headline inflation.

Headline inflation slowed to 0.4% YoY in October from 0.5% in September amidst declines in electricity costs and gas prices due to lower tariffs and the effects of the Open Electricity Market.

The Monetary Authority of Singapore (MAS) and Ministry of Trade and Industry (MTI) continue to expect mild external inflation amidst weak demands and well-supplied food and oil commodity markets, but crude oil remains vulnerable to geopolitical risks, according to an OCBC research.

Headline and core inflation rates remain at 0.6% and 1.1% YoY for 2019, at par with MAS-MTI’s prediction of around 0.5% YoY before rising to 0.5-1.5% next year. Headline inflation was recorded at 0.5% YoY for January to October this year.

“Domestic inflation should, however, reflect softening labour market conditions and a lower wage growth trajectory. Non-labour costs such as retail rents should also stay subdued, hence any cost pass-through to end-consumers would likely be constrained by the subdued macro-economic environment,” the report noted.

OCBC added that while core inflation posted 1.1% YoY for the first ten months of the year, it is likely to remain subdued for the remainder of 2019 to the low-end of the 1-2% official forecast range.