Inflation To Remain 'Fairly High' In 1st Half

Source : The Straits Times, Apr 16, 2008

FIRST-HALF YEAR FORECAST

SINGAPORE'S inflation rate will stay at record levels despite a tightening of monetary policy last week to help combat rising prices.

'Our projection is that inflation will stay fairly high at this current level - above 6.5 per cent for the first half of the year. And then, we expect it to go down in the second half of the year,' Trade and Industry Minister Lim Hng Kiang said yesterday on the sidelines of a biomedical science conference.

The Monetary Authority of Singapore (MAS) expects inflation this year to settle at the upper half of the 4.5 per cent to 5.5 per cent range. Inflation hit 6.6 per cent in January, the highest since 1982. Last week, the MAS allowed a rise in the Singapore dollar, which had since hit record highs against the greenback.

'Overall, I think we have a wide array of levers to address the inflation problem...The exchange rate, that's our main lever,' said Mr Lim. 'At the same time, we also tackle supply constraints, whether it is office space, commercial space, industrial space or wages through our flexibility in our labour markets.'

He said he was 'fairly confident' that Singapore would do well in the medium term, with a growth forecast for the year tipped at 4 per cent to 6 per cent.

While Singapore's trade with the United States has been affected, intra-Asia trade 'has been holding up quite well', added Mr Lim.

JESSICA CHEAM