Singapore sees mild deflation of -0.5% for 2015

Singapore is projected to experience a mild deflation of -0.5% for 2015, according to a forecast adjustment made by Maybank Kim Eng.

The tweak in its estimate is still within its earlier forecast range of between -0.5% and 0%, the research house writes in a note on Tuesday.

Maybank Kim Eng’s forecast comes on the back of several macroeconomic headwinds, following the latest inflation figures released on Monday.

These include the prevailing subdued outlook on transport cost given low global crude oil prices, depressed housing and utilities costs and soft global commodity prices, which should offset the impact of the tight job market.

Headline inflation eased to -0.8% in October from -0.6% in September, mainly due to the lower costs of oil-related and retail items, the Monetary Authority of Singapore and the Ministry of Trade and Industry said on Monday.

Core inflation, which excludes accommodation and private road transport costs, eased to 0.3% in October from 0.6% in September.

For 2016, Maybank Kim Eng expects inflation to nudge up to 0.5% on the receding effect of lower global oil prices.

The will also be underpinned by budgetary measures such as the reduction in the concessionary foreign domestic worker levy, one year road tax rebates, abolition of national examination fees and the increase in medical subsidies, it says.