Singapore's inflation accelerated at a faster-than-expected pace in June, driven by higher accommodation cost.
Annual inflation rose to 5.3 percent from 5 percent in May, a joint statement released by the Ministry of Trade and Industry and the Monetary Authority of Singapore showed Monday. The rate exceeded the 5.1 percent consensus forecast.
The annual acceleration primarily reflected the increase in accommodation cost as accommodation and private road transport costs together accounted for around two-thirds of overall consumer prices.
Housing costs rose at a faster rate of 9.7 percent after climbing 8.2 percent. Meanwhile, transport costs gained only 8.7 percent, following a 9.2 percent growth. Car prices grew strongly, but petrol prices fell by 0.8 percent. Food inflation eased to 2.3 percent from 2.5 percent.
Inflation is expected to be lower on average in the second half of the year compared to first half, but it will remain above historical average, the report said. For the whole year, inflation is set to come in at the upper half of the 3.5-4.5 percent forecast range.
On a month-on-month basis, overall consumer prices remained flat in June after edging up by 0.2 percent in the preceding month.
Excluding the costs of accommodation and private road transport, MAS core inflation was stable at 2.7 percent for the third consecutive month. The lower contribution from prices of food, services and oil-related items was offset by stronger annual increases in prices of retail products such as clothing and footwear.
Although the pass-through of wages and other business costs to consumer prices will continue, it will grow at more moderate pace than that seen earlier this year. Moreover, the earlier weakness in global commodity prices will dampen pressures on domestic prices of oil and food items in the near term.
MAS forecast core inflation to ease further in the second half of 2012 and average between 2.5-3.0 percent for the whole year.
In April, the central bank tightened its monetary policy to help anchor inflation expectations and ensure medium-term price stability.
by RTT Staff Writer
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