Singapore - Singapore inflation edges higher to 5.3% in June

SINGAPORE: Inflation in Singapore continues to climb with housing and transport costs topping the increase.

The consumer price index, a key gauge of inflation, rose to 5.3 per cent year-on-year in June, according to a statement from the Department of Statistics.

The data exceeded market expectations of a 5.1 per cent increase.

Prices remain firm as the effect of housing becomes stronger, gaining 9.7 per cent in June, with the cost of accommodation increasing by 10.8 per cent on-year.

Transport cost gained 8.7 per cent last month from 2011, with the increase mainly in private road transport because of higher car prices.

Together, accommodation and private road transport costs accounted for around two-thirds of CPI-All Items inflation in June.

Measured month-on-month, the index was unchanged after climbing 0.2 per cent in May.

MAS Core Inflation, which excludes the costs of accommodation and private road transport, was unchanged at 2.7 per cent for the third straight month.

Vice president of Research at Barclays Bank, Prakriti Sofar, said: "There is definitely a structural issue at play here because what we are seeing the government's labour policy continuing to feed into higher service sector prices within the economy."

Accommodation cost inflation was stronger than expected due to leasing contracts being renewed at considerably higher rentals, particularly in the HDB segment, a joint statement issued by the Monetary Authority of Singapore and the Ministry of Trade and Industry said.

COE premiums have also risen sharply recently, and will remain at elevated levels, given the further reduction in COE supply from August.

For the whole year, the authorities expect inflation rate to be lower in the second half of the year, compared to the first half.

However, it will remain above its historical average.

They add that inflation for the whole year is likely to come in at the upper half of the 3.5 per cent to 4.5 per cent forecast range.

- CNA/wm/ck

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