Economics

Economics: Singapore’s headline inflation rate in Nov ‘14 fell by -0.3% y/y (Oct ‘14: +0.1% y/y; consensus: -0.2% y/y), mainly on continued base-effect from drastic change in COE premiums. Declines in the costs of housing and other items except food also contributed to the slower headline inflation. From the previous month, headline inflation was up by +0.3% m/m (Oct ‘14: -0.4% m/m). Despite the deflation, Maybank-KE expects this to be temporary as the base effect from COE premiums fluctuations gradually dissipates in coming months. The Nov ‘14 CPI headline puts the house +1.0% y/y headline inflation estimate for 2014 plausible (YTD 2014: +1.1% y/y). Core inflation rate (CPI ex-accommodation and private road transport) eased further to +1.5% y/y (Oct ‘14: +1.7%y/y). Food price increase was marginal at +2.9% y/y in Nov ‘14 (Oct ‘14: +2.8% y/y) on price increase for both non-cooked food and prepared meals. Going forward, Maybank-KE expects inflation rate of around 1.0%-1.5% in 2015. The tame inflation outlook reflects continued volatility in transport cost and depressed housing cost, which would offset the tight job market conditions as well as stable-to-soft global commodity prices.