Consumer prices in Singapore continued to rise at a slower pace in March, reflecting a fall in transport and communication costs amid the weakening economy.
Thursday, Singapore's Department of Statistics said the consumer price index rose 1.6% year-on-year in March, slower than the 1.9% acceleration in the preceding month. The increase matched economists' expectations. This is the sixth consecutive month that inflation has eased.
In March, transport and communication prices, having a weight of 22% in the index, fell 5.4%, while costs of education and stationery declined 0.4%.
On the other hand, cost of housing, having a weight of 21% in the index, rose 5.5%. Price of food, with the highest weight of 23%, increased 4.6%. Price of clothing, footwear, healthcare and recreation and other activities also showed a rise in March.
Excluding the accommodation costs, consumer prices were up 0.4% in March.
Month-on-month, consumer prices fell 0.4% in March, following a 0.5% drop in the previous month. This was mainly due to lower cost of housing as well as transport and communication. Housing prices dipped 1.7%, while transport and communication prices were down 0.6%. However, clothing and footwear prices rose 1.2%.
Excluding accommodation costs, consumer prices remained at the same level in March as February. Similarly, on a seasonally adjusted basis, consumer prices were flat in March compared to the preceding month.
The Monetary Authority of Singapore, in its latest report on April 14, said inflation would continue to fall in the coming months, reflecting lower commodity prices and the slack in the demand in the domestic economy. Moreover, the central bank said the headline inflation could turn negative in certain months in the current year, owing to the high base in 2008. However, the MAS has kept the range of the inflation rate in 2009 unchanged at between minus 1% and 0%.
Further, owing to the sharp drop in domestic output over the last two quarters, the central bank forecasts the Singaporean economy to contract between 6% and 9% in 2009.
Meanwhile, reflecting the weakening global economic environment and easing domestic and external inflationary pressures, the MAS re-centered the trading band of the S$NEER or the nominal effective exchange rate earlier in the month, while retaining the existing policy of zero percent appreciation, and making no changes to the width of the band.
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