Singapore's inflation hit a fresh 26-year high in April and the government joined the Philippines and China in saying that fighting rising prices is now the country's number one economic priority.
The government raised its 2008 inflation forecast to 5-6 per cent from 4.5-5.5 per cent on Friday, citing high oil and food prices'The balance of risk has shifted towards inflation,' Ravi Menon, a permanent secretary at the Ministry for Trade and Industry, told a news conference. 'We expect food and oil prices to remain elevated in the near term and feed through into domestic prices.'
Both the Philippines and China have highlighted that inflation is their top economic priority as countries globally feel the brunt of record crude and food prices.
The Monetary Authority of Singapore said on Friday its monetary policy stance of an appreciating Singapore dollar was appropriate and the currency was its key tool to fight inflation.
'The pressure will be on to keep the currency strong. The MAS has been forced finally to raise their inflation forecast range,' said Robert Prior-Wandesforde, an economist at HSBC.
The 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. It tightened policy at its last policy meeting in April.
The Singapore dollar firmed to 1.3590 to the US dollar by 0310 GMT, compared with 1.3599 before the release.
Inflation peaking
The government raised its 2008 inflation forecast to 5-6 per cent from 4.5-5.5 per cent, as the annual inflation in April jumped to a higher-than-expected 7.5 per cent, matching a level last seen in March 1982 on higher housing, food and oil prices.
The trade ministry said inflation was peaking around current levels but may go higher over the next two to three months.
The April CPI rose 1.2 per cent over March, pulled higher by a 2.9 per cent advance in housing cost, following dearer electricity tariffs and accomodation costs.
'Housing cost was also affected by service and conservancy charge rebates which were given in March 2008 but not in April 2008,' the Department of Statistics said in a statement on Friday.
Food prices increased by 0.8 per cent due mainly to more expensive cooked food, rice and other cereals, milk products and cooking oil.
Reflecting higher car prices and dearer petrol, costs of transport and communication went up by 1.1 per cent. -- REUTERS
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