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Singapore Inflation Highest Since June 2008

Singapore's consumer price inflation accelerated at a faster-than-expected pace in August to reach its highest level in more than fourteen years, data published by the Monetary Authority of Singapore and the Ministry of Trade and Industry showed on Friday.

Consumer prices climbed 7.5 percent year-on-year in August, following a 7.0 percent rise in July. That was also above the 7.2 percent increase expected by economists.

Further, the latest inflation was the highest since June 2008, when prices had grown the same 7.5 percent.

MAS core inflation rose to 5.1 percent in August from 4.8 percent in the previous month. The expected rate was 5.0 percent.

The upward trend in inflation was largely driven by a 24.1 percent surge in private transport charges, due to a faster pace of increase in car prices.

Food inflation accelerated to 6.4 percent from 6.1 percent, boosted by sharp increases in the prices of both food services and non-cooked food.

Services inflation also rose to 3.8 percent from 3.5 percent, mainly because of a stronger pickup in holiday expenses.

Accommodation inflation increased marginally to 4.7 percent and 4.6 percent in the previous month.

On a monthly basis, consumer prices moved up 0.9 percent in August and the core CPI increased 0.5 percent.

Both MAS and the MTI expect upward pressures on Singapore's import prices to persist amid supply constraints in key commodity markets, tight labor conditions in major economies, and recovery in some regional economies post-Covid19.

Domestically, wage growth is expected to remain strong, thanks to a tight labor market, and businesses are likely to pass on the increased cost burden stemming from higher fuel and utilities costs and imported prices on to customers. Car and accommodation costs are also expected to stay firm.

MAS Core Inflation is projected to stay elevated over the next few months. For the full year, CPI-All Items inflation is expected to come in at 5.0-6.0 percent, while MAS Core Inflation is projected to average 3.0-4.0 percent.

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