Inflation in July eases to 4% but outlook stays grim

[SINGAPORE] Finally, some relief on the inflation front but with a caveat.

Singapore's headline inflation eased to 4 per cent year on year in July - down from 5.3 per cent in June - on the back of slower increases in the cost of accommodation, private road transport and oil-related items, the government said yesterday. But overall inflation for the year could still surpass expectations if car prices pick up pace, it cautioned.

Core inflation - excluding accommodation and private road transport costs, which together accounted for 60 per cent of July's headline inflation - dipped 0.3 of a percentage point to 2.4 per cent in July.

Core inflation could moderate further by year end, leaving room for the easing of monetary policy against the backdrop of slowing economic growth, economists said.

In July, accommodation cost inflation came in at 7.8 per cent, slowing from 10.8 per cent in June mainly due to the fact that rebates for service and conservancy charges (S&CC) were disbursed to HDB households in June 2011 but not this year, which boosted cost hikes in June.