Singapore’s inflation accelerated more than economists estimated in September, supporting the central bank’s decision to refrain from easing monetary policy this month.
The consumer price index rose 4.7% from a year earlier, the Department of Statistics said in a statement today. The median estimate of 17 economists in a Bloomberg News survey was for a 4.3% increase, after a 3.9% pace reported earlier for August. The September core inflation rate was 2.4%.
Singapore’s central bank, which uses the exchange rate to manage inflation, unexpectedly held off from slowing the currency’s appreciation this month even after the economy contracted last quarter. The monetary authority said today price gains may exceed 4.5% this year, more than its official forecast, amid pressure from global food costs, “persistent tightness” in the labor market and rents and car prices.
“Even as demand-side pressures remain weak, the feed through of higher wages may exert an underlying upward bias on services costs,” Wai Ho Leong, a senior regional economist at Barclays Plc in Singapore, said before the report.
Singapore guides the local dollar against a basket of currencies within an undisclosed band, and adjusts the pace of appreciation or depreciation by changing the slope, width and center of the band.
The Singapore dollar has risen more than 6% this year, the top performer among 11 Asian currencies tracked by Bloomberg.
“Given continued weakness in the global economy, imported inflation will be generally benign, although global food prices could face further upward pressures in the next few months,” the central bank and trade ministry said in a monthly statement on price trends today. “Meanwhile, the persistent tightness in the labor market will support slightly stronger wage increases in 2013, which will continue to be passed through to consumer prices.”
Consumer prices rose 0.6% last month from August, today’s report showed.
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