Singapore's inflation increased more than expected in March on higher car prices, a joint statement released by the Ministry of Trade and Industry and the Monetary Authority of Singapore showed Monday.
Annual inflation rose to 5.2 percent in March from 4.6 percent in February. The rate also exceeded the 4.7 percent expected by economists. Month-on-month, consumer prices climbed 0.8 percent largely due to higher car prices.
At the previous monetary policy meeting, the Monetary Authority of Singapore lifted the headline inflation forecast for 2012 to 3.5-4.5 percent from 2.5-3.5 percent. Today's report said inflation would average around 5 percent annually in the first half of the year before easing gradually in the second half.
To combat persistently high inflationary pressures, the MAS recently tightened monetary policy by allowing faster gains in the currency. At the semi-annual meeting in April, it raised the policy band of the slope of the Singapore dollar Nominal Effective Exchange Rate.
In March, car prices increased sharply, reflecting the 15 percent rise in certificate of entitlement premiums in February on the back of a pick up in buying interest.
Cost of retail items, such as clothing and footwear rose more moderately from a year ago. At the same time, services and food inflation remained broadly stable at 3 percent and 2.7 percent, respectively.
Although the increase in accommodation cost slowed to 9.8 percent annually in March, it is the single largest contributor to consumer price inflation.
Meanwhile, excluding the costs of accommodation and private road transport, core inflation edged down slightly to 2.9 percent from 3 percent in February.
Before easing gradually, the ministry said MAS core inflation will remain close to 3 percent in the coming few months. Accommodation cost will add more than one-third to overall inflation, while car prices and services fees will each account for one-fifth, it said.
by RTT Staff Writer
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