S'pore's March CPI Rises 6.7% To 26-Year High

Source : The Business Times, April 23, 2008

Singapore's inflation accelerated to an expected 6.7 per cent in March from a year ago to a 26-year high, the government said on Wednesday, as higher food, transport and housing costs lifted consumer prices.

Consumer prices in March rose 0.3 per cent from February after seasonal adjustments, the Department of Statistics said in a statement. Annual inflation was the highest since 7.5 per cent in March 1982.

Economists said inflation was probably near a peak after a run-up in the past year, but expected the central bank to keep tight monetary policy and allow the Singapore dollar to rise further to rein in domestic inflationary pressures.

Singapore's central bank conducts policy by steering the Singapore dollar within a secret trade-weighted band against a basket of currencies, not by adjusting interest rates.

Singapore's central bank tightened monetary policy this month to fight inflation after economic growth in the first quarter was stronger than expected. It is due to meet next in October.

It allowed the Singapore dollar to rise higher, citing a 'backdrop of continuing external and domestic cost pressures'.

The Singapore dollar rose 0.2 per cent to a record high of 1.3482 per US dollar on Wednesday as investors expected the central bank to allow for further currency appreciation to rein in inflation.

Economists had expected annual consumer prices to rise above January's high of 6.6 per cent due to record energy and food prices.

The government expects 2008 inflation to fall within 4.5 to 5.5 per cent, more than double last year's 2.1 per cent.

A sub-index for housing costs was up 8.1 per cent in March from a year ago while food prices, which carry the largest weighting in the index at 23 per cent, rose 7.6 per cent.

The statement does not include seasonally adjusted figures for the sub-indices. -- REUTERS