Singapore’s inflation eased to 5.0 per cent on-year in May, down from 5.4 per cent in April, as prices for accommodation and oil-related items rose at a slower pace.
Forecasters had expected May’s consumer price index (CPI) to rise 5.1 per cent.
Accommodation cost inflation fell from 12.7 per cent in April to 9.0 per cent in May, largely due to the timing of the disbursements of rebates for services and conservancy charges for HBD households, the Monetary Authority of Singapore (MAS) said in a statement.
Imputed rentals on owner-occupied accommodation also rose at a slightly slower pace of 10.4 per cent in May.
The overall price increase for domestic oil-related items eased from 8.9 per cent in April to 7.8 per cent in May, reflecting the recent weakness in global oil markets.
Services and food inflation rose marginally, by 0.1 percentage point to 2.9 per cent and 2.5 per cent respectively in May.
However, private road transport costs picked up from 8.2 per cent in April to 10 per cent in May after a spike in COE premiums which pushed up the cost of cars.
Experts said this spike will continue to feed through to at least next month’s CPI. But the high COE premiums for cars are expected to keep CPI above 5 per cent next month, analysts forecast.
Together, accommodation and private road transport costs account for about two-thirds of CPI-All Items inflation in May.
Regional economist at CIMB Research Song Seng Wun said: “I think looking at the trend so far, we suspect CPI won’t drop in June but probably in the second half. For June – we think we could see CPI rebounding from the 5 per cent to perhaps the 5.2 to 5.4 range. Reason being, 2 sides, COE prices continue to climb. COE prices only came off with the June allotment, so that will show up in the July CPI. On housing side, we are still seeing pressure on that side, in terms of the rentals.”
Excluding the costs of accommodation and private road transport, MAS Core Inflation remained steady at 2.7 per cent.
The MAS said CPI-All Items inflation “will likely ease gradually in the second half of 2012 after averaging an estimated 5 per cent year-on-year in the first half, though it could fluctuate from month to month”.
The central bank said accommodation and car costs are expected to remain high, with “leasing contracts continuing to be renewed at rentals that are considerably higher than those under existing contracts, especially in the HDB segment.”
Car prices are also likely to remain elevated, MAS said.
The MAS expects the upward pressure on wages and other business costs will continue to pass through to consumer prices, but at a more moderate pace than that seen earlier in 2012.