SG Economy

SG Economy: Singapore’s headline inflation rate in Mar ‘15 fell further by 0.3% y/y (Feb: -0.3% y/y), mainly on lower costs of housing & fueland- energy-related items such as petrol pump prices and electricity tariffs. This is the fifth consecutive month of deflation.

Nevertheless, from the previous month, headline inflation rose 0.2% m/m (Feb ‘15: +0.1% m/m), the first back-to-back m/m increase since Oct - Nov ‘13. For Jan - Mar ‘15, headline inflation was down by 0.3% y/y while core inflation averaged +1.1% y/y.

Core inflation rate was up, albeit slower, by 1.0% y/y (Feb ‘15: +1.3% YoY), as food prices increased at a slower pace of +2.1% y/y in Mar ‘15 (Feb ‘15: +2.5%y/y), attributed to the normalisation in demand after the Lunar New Year festive period.

Overall, Maybank-KE is maintaining its 2015 inflation forecast of 0% - 1.0%, reflecting subdued outlook on “Transport” cost given the low crude oil price effect on fuel prices, the continued depressed “Housing & Utilities” cost as well as stable-to-soft global commodity prices offsetting the labour cost impact of the tight job market. This is further supported by lower electricity tariffs starting Jan ‘15 which averages -8.0% q/q in 1Q15 and Budget 2015’s measures to alleviate living costs.