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Singapore Inflation Spikes On Transport Costs

Singapore Inflation Spikes On Transport Costs

Singapore's annual inflation accelerated more than expected to the highest level in eight months in February, due mainly to a faster growth in costs of private road transport.

Inflation as per the consumer price index climbed to 4.9 percent in February from 3.6 percent in January, data released by the Ministry of Trade and Industry and the Monetary Authority of Singapore (MAS) showed Monday.

The latest figure was the highest since June 2012, when consumer prices rose 5.3 percent. Inflation was forecast to be 4.1 percent.

Driving the sharp growth in inflation, private road transport expenses increased at a faster rate of 17.4 percent in February than 10.5 percent in the previous month. The growth in accommodation costs, meanwhile, eased to 5.9 percent from 6.1 percent, reflecting a slightly smaller increase in market rentals.

The MAS core inflation, which excludes private road transportation and accommodation, rose to 1.9 percent year-on-year in February from 1.2 percent in the prior month.

On a monthly basis, core inflation came in at 0.4 percent in February.

Food prices advanced 2.3 percent from a year earlier, and clothing and footwear prices moved up 0.5 percent.

The MAS said that given the subdued conditions in the global economy, imported inflation will be benign. However, the persistent tightness in the domestic labor market will support wage increases in 2013, some of which will continue to pass through to consumer prices, it said. Core inflation is expected to average 2-3 percent in 2013.

The rise in imputed rentals on owner-occupied accommodation will continue to add significantly to the headline inflation. Car prices could be volatile, as COE premiums adjust to the motor vehicle-related policy measures in February. The MAS maintained its forecast for headline inflation for this year at 3.5-4.5 percent.

The economy expanded 1.5 percent in the fourth quarter, after staying flat in the previous three months. In 2012 as a whole, the economy grew 1.3 percent.

by RTT Staff Writer

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