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SINGAPORE'S consumer price index (CPI) fell 0.5 per cent in June from May's levels, and compared to last June, fell by 0.5 per cent too, the Department of Statistics said yesterday.
This marks a third consecutive month of year-on-year CPI declines, but observers say deflationary pressures are easing.
Last week, the central bank raised its 2009 inflation forecast. It now expects CPI to range between a 0.5 per cent contraction and a 0.5 per cent increase, up from its previous forecast range of a one per cent fall to no change.
On a seasonally adjusted basis, the CPI rose by 0.2 per cent from May, following May's 0.8 per cent rise from April. The CPI for the first half of this year was also 0.8 per cent higher compared to last year's first half.
'Inflation has started to turn, but it will take time for it to be reflected in the year-on-year numbers, given base effects,' said HSBC economist Prakriti Sofat. Singapore's inflation peaked at 7.5 per cent last year.
The year-on-year decline in June's headline CPI was largely due to lower costs of transport and communication, housing and recreation and others.
Lower housing costs also contributed to June's month-on-month dip. Housing costs fell 3.1 per cent as rebates on service and conservancy charges were given in June but not May. Receding prices on clothing and footwear, thanks to the Great Singapore Sale, too contributed to the fall in CPI, DoS said.
In the coming months, fresh factors are likely to ease deflationary pressures, Barclays Capital economist Leong Wai Ho said.
Administered prices, such as those for electricity and car quotas, are likely to post further increase in the second half of this year, he says. He also expects a broad range of food prices, particularly imported edible oils and grains, to trend higher.
Ms Sofat expects food inflation to head south for a few more months, observing that international food prices typically feed through into domestic numbers with a lag of about six months.
But she too expects overall inflation to pick up from around September or October on the back of commodity price effects.
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