Singapore’s April Consumer Prices Post First Decline Since 2005
Singapore’s consumer prices fell for the first time since June 2005 last month as transport and housing costs dropped amid the deepest recession in the nation’s 44-year history.
The consumer price index declined 0.7 percent from a year earlier, after gaining 1.6 percent the previous month, the Department of Statistics said in a statement today. That compares with the median forecast for a 0.6 percent gain in a Bloomberg News survey of 11 economists. Prices declined 1.1 percent from March, without adjusting for seasonal factors.
Easing prices have allowed policy makers worldwide to cut interest rates and increase public spending to stimulate their economies amid the global recession. Singapore’s retail sales have slumped for six months as job losses mount in an economy forecast by the International Monetary Fund to be Asia’s weakest this year.
“With slower growth there is a strong case for us to see negative inflation,” said Vishnu Varathan, an economist at Forecast Singapore. “It may not be until early next year that we revert back to positive, but modest, price pressures. We are not looking at chronic deflation as a real risk.”
The government forecasts the $161 billion economy may shrink as much as 9 percent this year, while consumer prices may remain unchanged or fall 1 percent free credit score.
“Domestic cost pressures have started to ease in line with the recession and lower commodity prices,” the trade ministry said in a statement last week. “These trends are expected to persist and CPI inflation is estimated to continue to fall in coming months.”
Currency Devalued
The Monetary Authority of Singapore, which uses its currency to manage inflation, said last month it would adjust the trading range for the island’s dollar, a move economists say was a de facto devaluation of the exchange rate. A stronger currency helps to reduce the cost of imported goods.
Food prices, which make up 23 percent of the index, rose 3.6 percent in April from a year earlier, following March’s 4.6 percent increase. Transport and communications costs fell 6.3 percent, declining for a seventh month. Housing fell 1.7 percent in April, from a 5.5 percent gain in March.
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