Nov 23, 2012

Singapore - S'pore's inflation rate eases to 4.0% in Oct

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SINGAPORE: Singapore's inflation rate eased to 4.0 per cent in October from 4.7% the previous month.

This slower-than-expected increase in the consumer price index was mainly due to smaller gains in transportation and housing costs.

Meanwhile, core inflation rates, which excludes transport and accommodation costs, fell to 2.2 per cent in October from 2.4 per cent in September.

The Monetary Authority of Singapore (MAS) said this was due to lower contributions from food and oil-related items.

In October, transport cost increases moderated to 8.3 per cent from 10.8 per cent the previous month, reflecting the correction in Certificate of Entitlement (COE) premiums in September.

Accommodation related cost increases also slowed to 6.8 per cent in October from 7.7 per cent the previous month.

The MAS said the moderation was largely due to the lower base effect in September 2011 where HDB rental and service and conservancy charges (S&CC) rebates were given out.

Together, accommodation and transportation costs account for close to two-thirds of October's inflation figures.

Food and oil-related inflation rates also saw declines.

Food inflation slowed to 1.7 per cent in October compared to 2.1 per cent the preceding month, following smaller price increases in non-cooked food and prepared meals.

Prices of oil-related items also rose at a slower pace in tandem with the moderation in global crude oil prices.

Meanwhile, services inflation rose to 3.1 per cent in October from 3.0 per cent in September, due to a stronger pickup in the costs of holiday travel and household services.

Looking forward, the MAS said that imported inflation will be generally benign given the continued weakness in the global economy.

Still, the authority expects global food prices to potentially face upward pressures in the next few months and into the early part of 2013 due to weather-related supply disruptions.

MAS added: "Meanwhile the persistent tightness in the labour market will support slightly stronger wage increases in 2013, which will continue to be passed through to consumer prices."

On the whole, MAS anticipates core inflation to be "broadly stable" and averaging around 2.5 per cent this year, and 2 to 3 per cent in 2013.

For the full year, CPI-all items inflation will remain "elevated" in Q4 2012 and Q1 2013, reflecting significant contributions from housing and accommodation costs.

CPI-All items inflation is likely to come in slightly above 4.5 per cent in 2012 and ease to 3.5 to 4.5 per cent in 2013.

- CNA/xq

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