Singapore’s inflation remained low in April, but that’s all about the rent

Leslie Shaffer

Inflation in Singapore remained benign overall in April, data on Tuesday showed, coming in lower-than-expected, but that's largely because housing costs continued to fall.

Singapore's consumer price index (CPI) rose 0.4 percent on-year in April, slowing from a 0.7 percent rise in March, coming in below the 0.7 percent expected from a Reuters poll.

That was despite the cost of electricity and gas shooting up 18.7 percent in April, compared with a 4.2 percent rise in March, data from Singapore's central bank, the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) showed.

Rising private road transportation costs also grew 7.0 percent in April, as increases in car and petrol prices accelerated, the data showed.

But all of that was offset by continued declines in rents and imputed rents.

The all items less accommodation figure for April rose 2.4 percent on-year, nearly six times the headline figure.

In the first quarter, Singapore's rental price index fell 0.9 percent on-quarter, while property prices fell 0.4 percent, data from the Urban Redevelopment Authority (URA) in late April showed.

The vacancy rate fell to 8.1 percent in the quarter, from 8.4 percent in the fourth quarter, but that's still elevated historically. The vacancy rate touched a 16-year high of 8.9 percent touched in the second quarter of last year.

However, the core CPI figure, which excludes accommodation and private road transport, rose 1.7 percent, faster than the 1.2 percent rise in March.

Weiwen Ng, an economist for southeast Asia at ANZ, noted that was the fastest pace of increase since October 2014.

But Ng didn't expect that the larger-than-expected increase would affect the MAS' policy, noting the central bank said in the release that labor market conditions had slackened. Ng also noted that some of the core CPI rise was driven by administrative price increases, such as carpark charges and household refuse collection fees.

"(MAS') view that the labor market has weakened indicates that they expect generalized demand-induced price pressures to remain muted. This suggests any tilt towards policy tightening is some way off, and a neutral stance will remain for an extended period," he said in a note on Tuesday.

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