Singapore Inflation Hits 12-Year High In July

Source : AsiaOne News, Aug 23 2007

SINGAPORE (AP) -- Singapore's consumer prices rose at their fastest pace in 12 years in July as soaring rents combined with the impact of a sales tax hike.

The consumer price index rose 2.6 percent from a year earlier after rising 1.3 percent in June, the Department of Statistics said in a statement Thursday.

The rise was the fastest since January 1995 and topped a a 1.8 percent rise forecast by a Dow Jones Newswires poll of economists.

Immediately after the data release, four economists polled by Dow Jones Newswires said they expect full-year inflation to exceed 1.5 percent. The government's inflation forecast for the year is 0.5-1.5 percent.

The increase in the goods and services tax to 7 percent from 5 percent July 1 was widely expected to boost food and transport prices, and July marked the first month that a long-watched surge in real estate prices finally hit headline inflation.

Singapore's housing prices have surged in recent months as a boom in the luxury segment began to filter into the mass market. Private home prices rose 8.3 percent in the second quarter from the first, greater than the 4.8 percent rise in the first quarter, and the fastest since the record 11.8 percent rise posted in the second quarter of 1999.

Food prices increased by 1.4 percent due to costlier cooked items, fresh fish and fruits, the statement said.

Transport costs also rose moderately, mainly as a result of higher gas prices.

The consumer price index increased 1.5 percent from June in seasonally adjusted terms, also exceeding the poll's forecast for a 0.7 percent rise. The index rose 0.3 percent in June from May.

In unadjusted terms, the CPI rose 2.1 percent in July from June.