Singapore’s inflation accelerated to the fastest pace since January as food and housing costs increased, sustaining pressure on the central bank to allow the currency to appreciate and contain price gains.
The consumer price index rose 5.2% last month from a year earlier, the Department of Statistics said in a statement today. That matched the median estimate of 13 economists surveyed by Bloomberg News. Inflation was 4.5% in May, according to previously reported data.
The consumer price index rose 5.2% last month from a year earlier, the Department of Statistics said in a statement today. That matched the median estimate of 13 economists surveyed by Bloomberg News. Inflation was 4.5% in May, according to previously reported data.
The Monetary Authority of Singapore raised its inflation forecast for 2011 last week, citing higher home rental and transportation costs. The island’s currency has appreciated to unprecedented levels since the central bank said in April it would allow further appreciation to tame price gains, the third monetary tightening in a year.
“We do see some upside risks for inflation,” Pay Shuzhen, a Singapore-based economist at Australia & New Zealand Banking Group, said before the report. “Food inflation seems to be creeping back. A tight labor market, which gives rise to rising wages, will also cause demand-pull pressures to increase.”
Singapore’s consumer prices may climb 4% to 5% this year, higher than a previous forecast of 3% to 4%, central bank Managing Director Ravi Menon said July 21. Singapore, which uses the exchange rate as its main tool to manage inflation, said in April it will re-center the currency’s trading band higher.
The Singapore dollar has gained more than 13% against the U.S. currency in the past year to be the best performer in Asia excluding Japan. It traded at $1.2081 a dollar at 12:28 p.m. local time.
Prices fell 0.2% last month from May, without adjusting for seasonal factors, today’s report showed.
Singapore’s unemployment rate fell to 1.9% in the first quarter and companies are increasing wages to retain workers as job vacancies rise. Average wages before adjusting for inflation rose 8.5% in the first quarter from a year earlier, the Ministry of Manpower said June 15.
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