SINGAPORE (Reuters) - Singapore’s annual headline consumer price index rose more slowly than forecast in August, reinforcing expectations the central bank will keep policy unchanged at its review in October despite brighter economic growth prospects this year.
The all-items CPI in August rose 0.4 percent from a year earlier. That was slower than the median forecast in a Reuters poll of a 0.6 percent rise. In July, all-items CPI rose 0.6 percent from a year earlier.
The moderation in all-items CPI inflation largely reflected a fall in private road transport inflation, the Monetary Authority of Singapore and the Ministry of Trade and Industry said in a joint statement on Monday.
That, together with a moderation in food and retail inflation, more than offset a smaller decline in the cost of accommodation, they said.
Private road transportation inflation in August eased to 2.6 percent from a year earlier, versus 3.5 percent in July. The cost of accommodation fell 3.9 percent in August, a smaller decline than the 4.1 percent drop seen in July.
Singapore’s annual core inflation gauge, which excludes changes in the cost of accommodation and private road transport, rose 1.4 percent in August after rising 1.6 percent in July. The median forecast in a Reuters poll called for a 1.6 percent rise.
“It falls neatly within MAS expectations, there’s no big surprise here,” said Francis Tan, an economist for United Overseas Bank, adding that MAS is likely to keep its monetary policy unchanged at its policy review due in October.
“It may be time that they start normalising in April next year, following other countries who are doing it,” he added.
Singapore and other Asian economies that are highly dependent on trade have gained a big boost this year from an improvement in global demand, particularly for electronics products and components such as semiconductors.
Still, there has been little sign of any broad pick-up in demand-driven inflationary pressures, and most analysts say the central bank is unlikely to be in any hurry to tighten monetary policy.
“The inflation data once again confirms that weak domestic demand is weighing on the pricing power of the corporate sector and that there is little reason for the Monetary Authority of Singapore to relinquish its currently neutral exchange rate policy stance,” Sanjay Mathur, chief economist for Southeast Asia and India at ANZ, said in a research note.
Additional reporting by Masayuki Kitano; Editing by Jacqueline Wong