Thu, May 24, 2012 - Page 10 News List

Singapore says inflation to stay high for a few months


An ocean view of the Marina Bay Cruise Centre in Singapore, as seen from a boat off Marina Bay on Tuesday.

Photo: EPA

Singapore said inflation would remain elevated in the next few months after accelerating last month, as a surge in car-permit costs and rising wages add to price pressures in the city-state.

The consumer price index rose 5.4 percent from a year earlier, after climbing 5.2 percent in March, the Department of Statistics said in a statement yesterday. The median estimate of 17 economists in a Bloomberg News survey was for a 5.2 percent increase.

The core inflation rate was 2.7 percent last month.

The Monetary Authority of Singapore raised its inflation forecast for this year last month as it diverged from most other Asian central banks that have left borrowing costs unchanged or eased monetary policy in recent weeks.

Higher oil costs, rising housing rents, more expensive private transportation and unemployment near a three-year low have sustained price pressures in the Southeast Asian nation.

The Singapore dollar traded at S$1.2769 against its US counterpart at 12:29pm.

It has gained about 1.5 percent this year.

Singapore’s central bank, which uses the exchange rate to manage inflation, said last month it would increase “slightly” the slope of the currency trading band, and raised its forecast for consumer-price gains to 3.5 percent to 4.5 percent this year.

Inflation will “likely remain elevated over the next few months, before gradually easing” in the second half of the year, the central bank and trade ministry said in a monthly statement on price trends yesterday.

Prices rose 0.5 percent last month from March, the report showed. Singaporean Minister for Trade and Industry Lim Hng Kiang (林勛強) said last week inflation is estimated to remain at about 5 percent in the next few months.

Meanwhile, Malaysia’s inflation eased last month, giving the nation’s central bank room to keep interest rates low to support the economy as Europe’s debt crisis threatens growth.

Consumer prices rose 1.9 percent last month from a year earlier, the Putrajaya-based Statistics Department said in a statement yesterday, after climbing 2.1 percent in March.

The median estimate in a Bloomberg News survey of 21 economists was for a 2.1 percent increase.

Malaysia refrained from joining neighbors, including Indonesia and the Philippines, in cutting rates earlier this year even as it predicted a slower pace of growth for this year.

Bank Negara left borrowing costs unchanged at 3 percent for a sixth straight meeting this month.

Inflation in Malaysia is moderating and the only risk is commodity prices, central bank Governor Zeti Akhtar Aziz said last week.

Interest rates aren’t restricting borrowing activities and are supporting overall growth, she said.

“At this point in time, I believe that unless inflation does begin to again rise, it does not merit consideration of raising rates,” Zeti said.

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