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THE consumer price index (CPI) rose a seasonally adjusted 0.8 per cent in May from April, due to higher housing and transport and communications costs, the Department of Statistics (DOS) said yesterday.
Prices are trending upwards even though Singapore's inflation rate - the year-on-year change in monthly CPI - was negative for a second month in May.
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But the 0.3 per cent fall in May's CPI from a year ago was smaller than the consensus expectation of a 0.9 per cent drop and April's 0.7 per cent fall.
DOS said that the year-on-year decline was mainly due to lower costs of transport and communications, education and stationery and 'recreation and others', which offset increases in housing, food and healthcare costs.
The month-on-month increase in the CPI was largely due to a 2.9 per cent non-adjusted rise in housing costs, as rebates on service and conservancy charges were given in April but not May. Excluding accommodation costs, May's CPI remained unchanged at April's level.
More expensive cars and higher petrol prices raised the cost of transport and communications by 1.1 per cent in May.
Economists expect deflationary pressure to ease further in the coming months as the base effect of comparisons with last year's high prices comes to a close, and because the upward trend in the CPI's monthly change is likely to persist.
'Given a faster-than-expected closing of the negative output gap, lagged effects of the weaker Sing dollar and higher commodity prices, year-on-year CPI inflation may trough earlier than expected,' said Citi economists Kit Wei Zheng and Leon Hiew.
They have revised their 2009 CPI inflation forecast upwards, from minus one per cent to positive 0.2 per cent, as has Barclays Capital economist Leong Wai Ho, whose CPI forecast is now minus 0.3 per cent, up from minus one per cent previously.
'The resurgence of inflation in coming months will increasingly favour strength in the Sing dollar,' Mr Leong said.
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