Economy

Economy: Moderate further; 2016 to nudge up slightly
Headline CPI continued to deflate for the 12th month as it fell by 0.8% y/y in Oct (Sep '15: -0.6%).

Year-to-date, headline inflation averaged -0.5% y/y (10M14: +1.0%).

Housing & utilities remained the largest contributor to deflation, caused by persistent sluggish rentals, while transport costs fell on lower prices of COEs on top of a one-year road tax rebate.

Meanwhile, core inflation rose at a slower pace of 0.3% (Sep 15: 0.6%), on lower electricity tariffs and unchanged prices of retail items.

On the back of the prevailing subdued outlook given low global crude oil prices, incoming supply of newly completed housing units and industrial space, and continued soft global commodity prices, Maybank-KE believes headline inflation in Singapore would stay at the -0.5% region in 2015.

Next year, inflation is expected to nudge up slightly to +0.5% on the dissipating effect of lower global oil prices, as well as the budgetary measures that include the reduction in the concessionary foreign domestic worker levy, one year road tax rebates, abolition of national examination fees and increase in medical subsidies.