Singapore Inflation Accelerates, Narrowing Scope to Ease PolicySharon Chen
Singapore’s inflation rate rose to the highest in three months in December, reducing the central bank’s scope to ease monetary policy to boost growth.
The consumer price index rose 4.3 percent from a year earlier, after climbing 3.6 percent in November, the Department of Statistics said in a statement today. The median estimate of 18 economists in a Bloomberg News survey was for a 3.8 percent increase. Price gains averaged 4.6 percent in 2012, the government said.
Inflation has remained elevated even after the Monetary Authority of Singapore tightened monetary policy last year by allowing its currency to appreciate, as private property prices reached a record and the cost of owning a vehicle surged. The central bank forecasts price gains will be in a 3.5 percent-to-4.5 percent range in 2013.
“Domestic inflationary pressure is still exceptionally high,” Irvin Seah, a Singapore-based economist at DBS Group Holdings Ltd., said before the report. “For 2013, inflation will run sideways, hovering around the 4 percent mark throughout the year. Those factors that have been keeping inflation at such higher than normal level, will continue to fuel the pressures.”
The Singapore dollar was little changed at S$1.2284 against the U.S. currency as of 12:44 p.m. local time. It gained more than 6 percent last year, and reached a record in October after the central bank said it would maintain a modest and gradual appreciation.
The central bank and Trade Ministry said today accommodation and private transportation costs will account for around 60 percent of consumer price gains this year.
“Given continued weakness in the global economy, imported inflation will be generally benign,” the central bank and Trade Ministry said in a statement. “Meanwhile, the persistent tightness in the labor market will support wage increases in 2013, some of which will continue to pass through to consumer prices.”
Consumer prices rose 0.7 percent last month from November, today’s report showed. The December core inflation rate was 1.9 percent.