Singapore's Inflation Highest in More Than 12 Years
(Update1)
By Shamim Adam
Sept. 24 (Bloomberg) -- Singapore's consumer prices rose in August
at the fastest pace in more than 12 years, suggesting the central
bank will maintain a policy of allowing its currency to appreciate
to damp inflation.
The consumer price index increased 2.9 percent from a year earlier,
after gaining 2.6 percent in July, the Department of Statistics
said today. That was the quickest pace since December 1994 and
exceeded the 2.8 percent expected by economists. Prices rose 0.3
percent from July.
The central bank last month raised its forecast for inflation this
year after prices gained the most in more than a decade in July
following an increase in the goods and services tax, or GST. The
Monetary Authority of Singapore, which has sought a ``gradual and
modest'' strengthening in the currency since April 2004, will
review its policy next month.
``Inflation pressures have increased with oil prices reaching
record levels and the higher GST rate,'' said Vishnu Varathan, an
economist at Forecast Singapore. ``I don't see the MAS stepping
away from its policy for an appreciation in the Singapore dollar
anytime soon.''
The currency has gained 1.9 percent this year. It rose 0.2 percent
to S$1.5047 against the U.S. dollar as of 1:02 p.m. local time from
S$1.5071 on Sept. 21.
The central bank expects inflation in 2007 to be between 1 percent
and 2 percent, it said on Aug. 27, up from a previous range of 0.5
percent to 1.5 percent. Consumer prices may rise as much as 2
percent next year.
Sales Tax
The government raised the goods and services tax by 2 percentage
points to 7 percent on July 1 to make up for a revenue shortfall
after corporate tax rates were reduced. The tax increase will add
between 0.4 percent and 0.6 percent to consumer prices this year
and next, the central bank has said.
Food prices, which make up 23 percent of the index, rose 3.3
percent in August from a year ago, following July's 2.9 percent
increase. From July, food prices gained 0.4 percent.
Transport and communication costs, the second-biggest component at
22 percent of the index, climbed 3.4 percent in August from a year
earlier. From July, transport and communication prices rose 0.5
percent.
Transport costs are likely to gain further in coming months. Fares
for bus journeys will be raised from October, while oil prices
above $80 a barrel will increase fuel costs for automobile
owners.
Housing, Power
Housing costs, the third-largest component of the consumer price
index, climbed 1.1 percent from a year ago, after a 0.7 percent
gain in July, today's report showed. From a month ago, housing
prices rose 0.2 percent amid higher rental costs.
Singapore Power, the island's biggest power company, raised
electricity tariffs for the July to September quarter by an average
8.8 percent, citing higher oil prices. It reviews rates every three
months.
Recreation costs, which include holiday travel, gained 4.4 percent
in August from a year ago and rose 0.3 percent from the previous
month. Prices of clothing and footwear gained 0.8 percent from a
year earlier and increased 1.5 percent from July.
http://www.bloomberg.com/apps/news?pid=20601080&sid=a1nIJ4BJvhkk&refer=asia
The SGD continues to appreciate against the USD..so far..
