Singapore inflation eases to -0.5% in 2015

It’s expected to stay muted in 2016, too.

Singapore inflation eased to -0.5%, from 1% in 2014, according to a joint release by the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI).

CPI-All Items inflation came in at -0.6% in December, compared to -0.8% in November, marking the 14th consecutive month of contraction. This is largely due to a stronger pickup in the cost of petrol and overall price of services.

Meanwhile, full-year core inflation—which excludes accommodation and private road transport costs—eased to 0.5%, from 1.9% in the preceding year. It rose to 0.3% in December from 0.2% a month ago, on back of increased services inflation.

The release further stated that external sources of inflation are likely to remain subdued, given ample supply buffers in the major commodity markets, and soft global demand conditions. Global oil prices have crashed by about a third since mid-October, and are expected to stay down in 2016. On the domestic end of things, wage cost pressures persist, though their pass-through to consumer prices will be limited by the muted economic growth landscape

MAS Core Inflation is expected to rise gradually throughout 2016, as the YoY disinflationary effects of budgetary and other one-off measures ease. CPI-All Items inflation will continue to be constrained by waning car prices and imputed rentals on OOA, on back of an expected increase in COEs supply and newly completed housing units.

There is, however, significant uncertainty over the outlook for average global oil prices for 2016 as a whole.