Singapore’s key price gauge flashes deflation for first time in decade on virus woes

(C) Reuters. People shop at a pop-up store in Singapore

SINGAPORE (Reuters) – Singapore’s main price gauge slipped into deflation for the first time in over a decade in February, data showed on Monday, as the coronavirus pandemic drove declines in airfares and holiday expenses.

Economists polled by Reuters had been expecting a 0.1% year- on-year rise in core inflation – the central bank’s favored price measure.

But the downturn in prices in the services sector due to the outbreak led to a fall of 0.1% from a year earlier – the first deflationary print since January 2010.

Singapore’s headline consumer price index rose 0.3% from a year earlier, slightly below poll expectations of 0.35%.

On a month-on-month basis, headline inflation rose 0.1%, while core prices were down 0.1%.

Inflationary pressures are expected to remain subdued in the near term, Singapore’s trade ministry and central bank said in a joint statement, citing sharp falls in oil prices, weak labor market conditions and the coronavirus-driven global economic slowdown.

The city-state – which has banned entry to travelers to try to limit imported virus cases which have risen sharply in recent days – said similar containment measures abroad could lead to upward price pressures on imported food.