SINGAPORE'S inflation may slow in the second half from the preceding period, Finance Minister Tharman Shanmugaratnam said in Jakarta on Friday.
Speaking to reporters, he said the Government does not need to adjust its inflation forecast of 4.5 per cent to 5.5 per cent, reported Bloomberg news.
Singapore's policies focus on the long-term trend, said Mr Shanmugaratnam. -- ST PHOTO: THOMAS WHITESingapore's policies focus on the long-term trend, said Mr Shanmugaratnam.
The Monetary Authority of Singapore expects 2008 inflation to average at the 'upper half' of its forecast range of between 4.5 per cent and 5.5 per cent, after prices gained 2.1 per cent last year. Inflation has accelerated in the past year partly because of rising raw material prices and after the Government raised the goods and services tax (GST) on July 1.
Global food prices surged 57 per cent in March from a year earlier, according to the United Nations. Rice prices gained today to US$23.45 per 100 pounds in Chicago, more than doubling from a year earlier. Crude oil futures yesterday climbed to a record US$124.53 a barrel in New York, also double the level a year ago.
'In medium term, I think inflation is rather stable,' said Mr Shanmugaratnam. 'We have to devise strategies that aren't just short-term mitigation but ensuring that regionally and globally, we have a holistic approach to food price inflation and fuel price.'
Singapore's central bank, in its twice-yearly review of the exchange rate, on April 10 unexpectedly targeted a stronger trading range for the currency to help ease rising costs of staples such as food and energy.
The Singapore dollar has gained 4.8 per cent this year, the second-best performer among 10 Asian currencies tracked by Bloomberg. The consumer price index jumped 6.7 per cent in March from a year earlier, the fastest pace in 26 years, according to the Department of Statistics.
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Factors behind rising rice prices
EXPORT CURBS:
* March 2008 - India bans exports of non-basmati rice again as inflation hits a 14-month high, alarming policymakers.
* March 2008 - Egypt bans rice exports from April 1 to October to hold down local prices. The country normally produces about 4.6 million tonnes a year of white rice, leaving a domestic surplus of about 1.4 million tonnes for export.
* April 2008 - Vietnam extends a ban on rice sales until June to help stabilise domestic food prices as it tries to tame double-digit inflation. Prior to that, it had curtailed exports for March and April.
* April 2008 - Brazil temporarily suspends rice exports to safeguard domestic supply and keep prices of the basic foodstuff stable. Brazil, which is not a major global rice supplier, exported 313,000 tonnes of rice last year.
* April 2008 - Indonesia, South-east Asia's largest rice consumer, says it would curb medium-grade rice exports to combat inflation. Under Indonesia's new rice export rules, state procurement agency Bulog is allowed to sell medium-grade rice overseas only when national stocks are above 3 million tonnes and domestic prices are below a government's target price.
* April 2008 - India slaps export taxes on basmati rice, on top of an existing ban on non-basmati rice exports.
* May 2008 - Bangladesh bans non-aromatic rice exports.
MYANMAR CYCLONE
A cyclone sweeps through Myanmar's Irawaddy delta, inundating rice crops and raising the prospect that the country may need to import from its neighbours. The UN's Food and Agriculture Organisation said it had been looking for 600,000 tonnes of rice exports from Myanmar this year.
SCRAMBLE TO BUILD STOCKS
March 2008 - The Philippines says it aims to import up to 2.2 million tonnes of rice this year to meet a domestic shortfall, in what could be the biggest overseas purchase of the staple in a decade. Local harvests have failed to keep up with expanding population, lifting inflation to a 16-month high.
* March 2008 - Bangladesh says it would import 400,000 tonnes of rice from India to cushion the country's dwindling stocks. The imports, allowed under a government-to-government deal, would not be subjected to the rise in rice export prices.
* April 2008 - Singapore says it would allow rice importers to bring in more stock to meet increased demand amid consumer fears of a rice supply crunch and higher prices.
* May 2008 - Mexico says it will allow 250,000 tonnes of rice to be imported without the usual 20 percent tariff in an effort to protect Mexicans from soaring food prices.
FALLING WORLD INVENTORIES World inventories have fallen by nearly 50 percent from a record high of 147.1 million tonnes in 2000/01, although they have already recovered slightly from a low in 2004/05. They are expected to rise marginally by the end of this crop year.
SPECULATIVE BUYING On the Chicago Board of Trade, financial speculators looking for the next big commodity play, have helped lift prices by about 80 per cent this year to successive record highs. To a degree, hoarding by consumers has also fed the rise by spurring importers to seek supplies sooner.
DIVERSIFICATION OF LAND USE In some countries such as the Philippines, production is failing to keep up with demand because paddy land is being overtaken for industrial development, or because farmers are seeking other trades. This is a longer-term issue that should contribute to supply tightness in the future, and governments in Vietnam and the Philippines have both moved to curb conversion of farmland to other uses.
GROWING DEMAND In poor nations facing a doubling in wheat and corn prices, rice consumption is rising, but this is partly offset by falling per-capita consumption in big countries such as China.
Data from the US Department of Agriculture shows that consumption in China - which accounts for 30 per cent of world consumption - has fallen by 3.9 per cent over the past five years. But global consumption has risen by 2.7 per cent over the same period, in places such as Nigeria, the Philippines and Bangladesh. - REUTERS
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