(RTTNews) - Singapore’s consumer prices declined for the sixth consecutive month in September, due to lower costs of housing, recreation, transport and communication, an official report revealed Friday.

The Department of Statistics Singapore said the consumer price index fell 0.4% on a yearly basis in September, faster than a 0.3% drop in August. Moreover, it was steeper than a 0.2% fall anticipated by economists.

Housing costs declined 2.5%, due to lower electricity and gas tariffs and cheaper liquefied petroleum gas. Transport and communication prices fell 0.2% on cheaper petrol. Cost of recreation and others slipped 1.8% on lower holiday travel costs.

However, food prices rose 0.8%, and education and healthcare prices were up 2% and 2.1% respectively. Excluding accommodation costs, consumer prices were down 0.9% from last year.

Month-on-month, consumer prices declined 0.1%, reversing a 0.4% rise in the previous month. Excluding accommodation costs, consumer prices held steady in September. Moreover, after seasonal adjustments were made, consumer prices remained unchanged in the month. In the first nine months of the year, consumer prices rose 0.4% from the same period last year.

Tim Condon, ING’s Chief Asian economist said property price inflation is the policy concern in Singapore. Residential property prices increased 15.9% sequentially in the third quarter, reversing 4.7% drop in the preceding quarter, according to data released by the Urban Redevelopment Authority.

Meanwhile, the economist sees a return to S$NEER appreciation trend in the April 2010 policy statement. On October 12, the Monetary Authority of Singapore maintained the current policy stance of a zero percent appreciation of the Singapore dollar nominal effective exchange rate or S$NEER policy path.

The MAS said consumer prices would be driven by external factors including higher oil and food commodity prices in the world markets for the rest of this year. Domestic inflationary pressures could be curtailed by subdued factor costs, but are likely to rise in the second half of next year.

The central bank expects inflation to be flat this year, and then rise to between 1% and 2% next year. Further, the MAS expects the underlying inflation rate, which excludes accommodation and private road transport costs, to come in around the same range.

Last week, the Ministry of Trade and Industry raised the GDP forecast for 2009. The ministry estimates the city-state economy to shrink in the range of 2.5% to 2% this year compared with 4% to 6% contraction estimated in July. Official data showed an annual growth of 0.8% for the Singapore economy during the third quarter of 2009, compared to a 3.2% contraction in the preceding quarter.

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Posted in Categories: Economy, Forex, Releases.

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