The department said on a monthly basis, the CPI for January 2016 decreased 0.3 per cent to 114.5 from 114.8 recorded in December 2015.
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By contrast, the price of Clothing & Footwear posted a year-on-year decline of 2.23 per cent, in addition to the drop in Communication charges of 1.26 per cent year-on-year in the month.
The Monetary Authority of Singapore and the Ministry of Trade and Industry said they have revised down their 2016 forecast for all-items consumer inflation to a range of -1.0 percent to 0.0 percent from -0.5 percent to 0.5 percent previously. It said in January it expected inflation to peak in the first quarter before moderating, as low energy and commodity prices persist.
The MAS, however, kept its 2016 core inflation forecast unchanged at 0.5 percent to 1.5 percent.
“The recent reform to energy prices meant that housing and utilities and transport were the main sources of inflation as they accelerated sharply in January”, Jadwa said.
This alone took away 0.71 percentage points from the headline inflation rate and reflects the persistently weak rental market, noted Mr Leong.
Healthcare services costs grew though, as the disinflationary effects of enhanced medication subsidies introduced in January previous year dissipated, the agencies added.
For the whole of 2015, CPI-All Items inflation fell by 0.5 per cent, down from 1 per cent in 2014.
The move came as new data showed Singapore had its 15th straight month of negative inflation last month – the longest spell of sliding prices in nearly four decades. The jump in overall prices was caused by the 20.6 per cent increase in the price of Alcoholic Beverages & Tobacco, as well as the 7.39 per cent hike in the cost of Housing & Fuels, according to DSEC.
Others, like Citi’s Kit Wei Zheng and ANZ’s Ng Weiwen interpret it as yet another sign of the rising possibility of a weaker Singapore dollar policy come April. There will be some pass through from the tight labour market into consumer prices, although the pass through is not going to be as strong as what was anticipated in the past.
Looking ahead, economists said prices could start to pick up towards the second half of the year, citing favourable base effects.
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Crude oil prices have more than halved over the past year, crimping revenue for oil exporting nations such as Malaysia. “So although it’s up, although it’s positive, it’s a smaller number than what we thought”, he added.
