Singapore may be famed as one of the most expensive cities in the world, but prices are dropping, with analysts giving the credit to the city-state's legions of maids.
For two years running, Singapore was ranked as the world's most expensive city by the Economist Intelligence Unit (EIU), with high price tags on clothing, transportation -- particularly the fee system for buying cars -- and housing.
But in May, the consumer price index surprised analysts by dropping a larger-than-expected 0.4 percent on-year. That's an eyebrow-raiser for an import-dependent country with a depreciating currency and rising wages.
"The surprise was driven by one of the normally mundane components: Household durables and services," Philip McNicholas, an analyst at BNP Paribas, said in a note Tuesday.
That fell 2.0 percent on year, slicing 0.3 percentage point from the monthly core consumer price index (CPI), he said.
"The reason for this sharp swing was the halving of the foreign domestic worker (i.e. maid) levy that was announced by the government earlier this year in the budget."
Why was one item in the budget big enough to push the island-nation toward outright deflation?