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Singapore Inflation Slows in August Ahead of MAS Policy Decision

A vendor unloads produce from a cart at a fruit stall inside the Chinatown Wet Market in Singapore, on Wednesday, Nov. 4, 2015. The Monetary Authority of Singapore eased monetary policy for the second time this year last month, as trade ministry data showed the economy narrowly avoided a technical recession, saying weakening prospects for global growth will pose headwinds in the coming months. Photographer: Nicky Loh/Bloomberg

(Bloomberg) — Singapore’s inflation slowed in August, matching the weakest pace this year, and testing the Monetary Authority of Singapore ahead of its semi-annual policy decision in October.

Highlights

CPI rose 0.4% from year earlier (est. 0.6%); Singapore Department of Statistics previously reported CPI rose 0.6% year-on-year in July Prices climbed 0.3% from prior month Core inflation increased 1.4% from August 2016 (est. 1.6%); this is a measure monitored by the MAS, which excludes private road transport and accommodation.

Key Takeaways

The MAS, which uses the exchange rate as its main tool, has kept its policy stance unchanged since April 2016. The central bankers said at their April meeting this year that they would stick to a neutral stance for an “extended period” of time. Economists are watching closely for any tweaks to the language while also monitoring data that might give the central bankers reason to consider tightening measures.

While the Singaporean economy has been recovering, the strength primarily has been due to a pickup in exports. Consumer spending and the labor market remain weak.

“Overall, domestic sources of inflation remain relatively muted,” the MAS and Ministry of Trade and Industry said in a joint statement after the data, repeating language they issued in August. “Conditions remain slack in the labor market and this is expected to dampen underlying wage pressures, even as commercial and retail rents have continued to ease.”

Other Details

Housing and utilities, which make up a quarter of consumer price basket as the heaviest-weighted category, fell 2.3% in year ended in August Education and health care showed the fastest rates of inflation, at 2.7% and 2.5%, respectively MAS and MTI are looking for core inflation to average 1% to 2% for all of 2017, compared with 0.9% last year.

To contact the reporter on this story: Michelle Jamrisko in Washington at mjamrisko@bloomberg.net To contact the editors responsible for this story: Nasreen Seria at nseria@bloomberg.net Karl Lester M. Yap

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