shadow_left
Logo
Shadow_R
   
SINGAPORE'S CONSUMER PRICES RISE LESS THAN EXPECTED Print E-mail

June 23 (Bloomberg) -- Singapore's consumer prices rose at a slower-than-expected pace last month, reducing the need for the central bank to allow further gains in the currency to rein in inflation.

The consumer price index jumped 7.5 percent from a year earlier, matching April's pace that was a 26-year high, the Department of Statistics said today. That's lower than all 13 estimates in a Bloomberg News survey of economists, where the median forecast was a 7.8 percent increase. Prices rose 0.2 percent from April.

``Inflation will probably moderate in the second half of the year,'' said an economist at United Overseas Bank Ltd. in Singapore. ``That will allow the central bank to remain on hold rather than tighten monetary policy at its next review in October.''  

The Monetary Authority of Singapore last month increased its forecast for inflation in 2008, predicting consumer prices will gain between 5 percent and 6 percent. The central bank has allowed its currency to strengthen at a faster pace against the U.S. dollar this year, saying the exchange rate remains its most effective tool to fight inflation.

The Singapore dollar traded at S$1.3649 against the U.S. currency in Singapore, compared with S$1.3652 on June 20. The currency has dropped 0.3 percent in the past month.

Rice, Wheat

Singapore's inflation rate will average 6 percent this year, up from a median prediction of 5 percent in March, according to a central bank survey of 21 economists released last week. Consumer prices will probably gain 7.5 percent in this quarter, the survey showed.

Food prices, which make up 23 percent of the index, rose 9 percent in May from a year ago, following April's 8.5 percent increase. From April, food prices gained 0.8 percent.

Oil has almost doubled in the past year, and prices of grains such as rice, corn, wheat and soybean reached unprecedented levels in 2008.

Transport and communication costs, the second-biggest component at 22 percent of the consumer price index, climbed 6 percent in May from a year earlier. From April, transport and communication prices rose 0.6 percent.

Record oil prices are increasing fuel and transport costs for consumers. The Singapore government doesn't subsidize pump prices, leading petrol companies to pass on the rising gasoline and diesel costs to car owners. Crude reached an unprecedented $139.89 a barrel on June 16.

Housing costs, the third-largest component of the price index, climbed 12.4 percent from a year earlier. From the previous month, housing prices rose 0.5 percent.

 
< Prev   Next >