Singapore’s core and headline inflation remained in the red in the second half of 2020, with the consumer price index (CPI) inching down by 0.2% y-o-y, unchanged from 1H2020.

A substantial drag came from the prices of petrol, electricity, outpatient services and clothing & footwear, the Department of Statistics (Singstat) says.

Core inflation registers price increments to sectors other than accommodation and private transport, while headline inflation reflects the total inflation in an economy.

The CPI level of households from the lowest 20% income group had the largest decline of 0.2% y-o-y. By contrast, the decline for households from the middle 60% and highest 20% income groups had dipped by 0.1% each.

Excluding imputed rentals on owner-occupied accommodation (OOA), the CPI levels had also fallen for households with income levels in the lowest 20% (0.4%), middle 60% (0.3%) and highest 20% (0.2%).

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Singstat says that households from the lowest 20% income level group saw the sharpest decline as they received more subsidies to defray the cost of outpatient services as well as rebates to offset the cost of electricity.

The authority adds that the group was also less affected by the increase in car prices in 2020 as the group spends less on this.

Overall, the CPI Index for general households reversed into the red with a 0.2% decline, from the 0.6% increase seen in 2019.

Breaking this down by household level, Singstat states that the index had dipped by 0.1% for both the lowest 20% and middle 60% income groups, and 0.2% for the highest 20% income group.

This comes as all three income groups had incurred “cheaper electricity, petrol, outpatient services and clothing & footwear, which collectively outweighed the effect of higher food prices and bus & train fares,” the authority elaborates.

Excluding imputed rentals on OOA, the CPI levels of all three income groups had inched down by 0.3% each.

In the last month of 2020, Singapore’s core inflation declined further to come in at -0.3%, while the headline measure came in flat.

See: Singapore's core inflation declines further in December, while headline inflation comes flat

Maybank Kim Eng economists Chua Hak Bin and Lee Ju Ye expect inflation to “turn mildly positive but remain contained in 2021”.

This is “as a sluggish  labour market recovery will keep wage cost pressures in check. The recovery in energy prices from the low base last year will push up utilities and transport costs,” they explain.