Categorized | Singapore Trading News

Singapore Exchange: Singapore inflation slows to less than 5% for first time in 2011 Share

Singapore’s inflation slowed to less than 5% for the first time this year in April as a strengthening currency reduced the cost of imported goods.

Consumer prices rose 4.5% last month from a year earlier, the Department of Statistics said in a statement today. That was the slowest pace in five months, according to data compiled by Bloomberg based on previously released information, and compares with the 4.4% median estimate of 11 economists surveyed by Bloomberg News.

Asian central banks from China to Thailand and India have raised interest rates or allowed their currencies to gain to curb price pressures as oil and food costs rise. Singapore’s dollar rose to records after the central bank said April 14 it would allow further appreciation in its third tightening of monetary policy in a year.

“Singapore’s inflationary pressures remain high,” Pay Shuzhen, a Singapore-based economist at Australia & New Zealand Banking Group, said before the report. “With a tightening labor market, high commodity prices and housing costs, inflation will continue to rise.”

Prices rose 0.3% last month from March, without adjusting for seasonal factors, today’s report showed. A core inflation measure that excludes accommodation and private road transport showed prices climbed 2.2% in April from a year earlier, the statistics department said.

Singapore raised its growth forecast for 2011 last week after the island’s economy expanded the most in Southeast Asia in the three months through March. Gross domestic product will increase 5% to 7% this year, the trade ministry said May 19.

The Monetary Authority of Singapore, which uses the exchange rate as its main tool to manage inflation, said last month it will re-center the currency’s band higher.

Singapore’s inflation may have peaked and a stronger currency has helped damp price gains, central bank Managing Director Ravi Menon said May 18. The monetary authority forecasts inflation will average 3% to 4% this year.

The Singapore dollar has gained more than 13% against the U.S. currency in the past year to be the best performer in Asia excluding Japan. It traded at $1.2452 a dollar at 12:54 p.m. local time.

Pressure on consumer prices may increase in the coming months after Singapore Power, the island’s main electricity provider, increased tariffs for the April-to-June quarter by an average 6.5% because of higher oil costs.

Adapted from: Bloomberg & i3investor

Leave a Reply