Feb 25, 2013

Singapore - Singapore's inflation rate eases to 3.6% in Jan

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SINGAPORE: Singapore's inflation rate came in lower-than-expected last month, partly because of a higher base brought about by the Chinese New Year holidays in January last year.

Department of Statistics data showed that the Consumer Price Index (CPI) in January 2013 rose 3.6 per cent from a year earlier, after increasing 4.3 per cent on-year in December.

In a joint statement, the Monetary Authority of Singapore (MAS) and the Trade and Industry Ministry said: "while private road transport cost rose sharply in January, the contributions of all other major categories were lower, partly because of base effects."

Food prices increased by 1.0 per cent in January, compared with 1.5 per cent in December. This was mainly attributed to the higher base in January 2012 due to the seasonal rise in food prices during the Chinese New Year.

Prices of oil-related items fell by 1.4 per cent, the first on-year decline since December 2009, reflecting the weakness in global oil prices near the end of 2012.

Accommodation cost inflation eased to 6.1 per cent in January, following an 8.5 per cent gain in the preceding month.

Imputed rentals on owner-occupied accommodation contributed 1.1 percentage points to overall inflation, slightly lower than the 1.2 percentage points a month ago.

Private road transport cost jumped by 10.5 per cent in January, up from 9.3 per cent in December 2012. This was due to sharply higher Certificates of Entitlement (COE) premiums in December 2012 compared to a year ago.

MAS core inflation, which excludes the costs of accommodation and private road transport, eased to 1.2 per cent from 1.9 per cent due to lower contributions from all its major components.

The central bank warned that the persistent tightness in the domestic labour market will support wage increases in 2013.

As a result, part of the wage rises will be passed through to consumer prices.

MAS core inflation is therefore expected to average 2 to 3 per cent for the whole of 2013.

For the whole of 2013, CPI-All Items inflation is likely to be 3.5 per cent to 4.5 per cent.

- CNA/ck

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