Bloomberg News

Singapore Inflation Holds Above 5% as Transportation Costs Surge

October 24, 2011

Oct. 24 (Bloomberg) -- Singapore’s inflation rate held above 5 percent for a fourth month as housing and transportation costs surged.

The consumer price index rose 5.5 percent in September from a year earlier, the Department of Statistics said in a statement today. That compares with the 5.6 percent median estimate of 15 economists surveyed by Bloomberg News. Inflation was 5.7 percent in August, according to previously reported data.

Singapore’s central bank, which uses the island’s dollar to manage prices, said this month it will slow gains in its currency, joining other Asian policy makers in trying to juggle inflation pressures with protecting growth amid a faltering global recovery. The trade ministry cut its growth forecast for 2011 on Oct. 14 and the Monetary Authority of Singapore said the expansion may slow further next year.

“Wage inflation pressures from the still tight labor market” could keep services costs and inflation elevated, Kit Wei Zheng, a Singapore-based economist at Citigroup Inc., said before the report. “Accommodation costs, which MAS guidance had earlier flagged as a significant inflation driver, will also be another source of inflation.”

The Singapore dollar fell more than 7 percent against its U.S. counterpart in September, along with most other Asian currencies, as a deepening European debt crisis prompted investors to shun emerging-market assets. It had reached unprecedented levels since the central bank said in April it would allow further appreciation to tame price gains, trading below S$1.20 in July.

Inflation will average about 5 percent this year and 2.5 percent to 3.5 percent in 2012, the central bank said this month.

Prices fell 0.2 percent last month from August, without adjusting for seasonal factors, today’s report showed.

--Editors: Stephanie Phang, Brendan Murray

To contact the reporter on this story: Shamim Adam in Singapore at sadam2@bloomberg.net

To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net


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