Singapore Inflation Eases to 38-Month Low After Government Curbs

Singapore’s inflation slowed to the lowest in more than three years in April after the government tightened curbs on vehicle and property purchases.

The consumer price index rose 1.5 percent from a year earlier, after climbing 3.5 percent in March, the Department of Statistics said in a statement today. The median estimate of 17 economists in a Bloomberg News survey was 3 percent. Core inflation, which excludes accommodation and private road transport, slowed to 1.4 percent from 1.7 percent in March.

Singapore’s policy makers have sought to contain price gains by putting restrictions on car loans and introducing a series of property cooling measures. The central bank last month maintained a policy of allowing gradual gains in the currency to contain inflationary pressures, while a report today showed the economy unexpectedly expanded last quarter.

“The sudden drop is due to the government really stepping up efforts to control inflation since this year,” said Joey Chew, an economist at Barclays Plc in Singapore. “Monetary policy right now is in what I would consider cruise control. Unless we have significant shocks in growth and inflation, this stance will remain in place for the medium term.”

Singapore controls pollution and congestion on its roads by selling a limited number of vehicle permits every year. The cost of vehicle permits fell by the most in more than four years at a March 13 auction after the central bank in February limited the amount of money banks are allowed to offer for car loans.

The government has imposed steps to cool the housing market since 2009, with the last round in January including an increase of as much as 7 percentage points in stamp duties. Property prices are stabilizing, Monetary Authority of Singapore Managing Director Ravi Menon said this week.

Transport costs rose 0.5 percent in April from a year earlier, after climbing a previously reported 6.9 percent in March. Housing costs rose 1.1 percent last month, from a 4.1 percent gain in March.

The central bank forecasts price gains to be between 3 percent and 4 percent this year, while core inflation will be at 1.5 percent to 2.5 percent.

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