SINGAPORE, July 23 — Singapore's annual consumer prices fell for the eighth straight month in June, an outcome that could give the central bank room to ease policy if economic growth disappoints.

The all-items consumer price index (CPI) in June fell 0.3 per cent from a year earlier, official data showed today, in line with the median forecast in a Reuters survey. In May headline CPI fell 0.4 per cent.

The smaller drop in annual headline CPI was due to factors such as larger increases in the costs of food and private transport costs, the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) said.

The MAS core inflation gauge rose 0.2 per cent from a year earlier, up from a five-year low of 0.1 per cent in May, due to a pick-up in services and food-related costs.

Core inflation excludes the prices of cars and accommodation, which are influenced more by government policies, and is the focus of monetary policy.

The drop in the core inflation rate to a five-year low in May, coupled with a contraction in Singapore's economy in the second quarter, have put renewed focus on the possibility of a further easing of monetary policy later this year.

Tim Condon, head of research Asia for ING Bank in Singapore, said any further loosening of monetary policy will likely depend on the outlook for growth.

“Inflation is incapable of surprising at this point. They've slashed their forecasts and I think that's it,” he said.

“People are now talking about them reducing the 2015 growth forecast... If they cut that, given the benign inflation outlook, that could argue for some increase in (monetary policy) accommodation.”

Condon expects the MAS will keep its monetary policy unchanged at the next scheduled policy review in October.

Services inflation in June rose slightly to 0.55 per cent on year, compared with 0.46 per cent in May, MTI and MAS said.

But accommodation costs in June fell 2.6 per cent from a year earlier after a 2.5 per cent drop in May.

MAS Managing Director Ravi Menon said on Tuesday the city-state was not facing deflation even though the headline consumer inflation rate was likely to stay negative on an annual basis throughout 2015, adding that the central bank was “very comfortable” with its current monetary policy settings. — Reuters