Inflation hits 1-year high
June's CPI rose 1.3% from last year; inflation to stay high for rest of 2007: Analyst
Singapore's inflation accelerated to the highest in a year last month as holiday travel became more expensive and car prices rose.
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The consumer price index (CPI) rose 1.3 per cent from a year earlier, after gaining 1 per cent in May, according to the Department of Statistics yesterday. Prices fell 0.3 per cent from May.
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In the first six months of this year, consumer prices were 0.8 per cent higher compared with that of a year ago, the bureau added.
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Rising wages and expanding payrolls amid the longest economic expansion here since 1991 have encouraged consumers to spend.
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Inflation pressures are likely to intensify after the goods and services tax (GST) increased this month and electricity tariffs were raised for the third quarter.
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"We expect inflation to stay fairly high for the rest of this year," said Mr Joseph Tan, a Fortis Bank strategist. "Retailers have more pricing power with the economy doing well."
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In April, the Monetary Authority of Singapore (MAS) reaffirmed a three-year policy of allowing the local currency to strengthen, a move that has reduced import costs and helped keep inflation within the central bank's forecast range.
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MAS has sought a "modest and gradual" appreciation in the Singapore dollar since April 2004 to curb inflation, which it expects to be at least 1.5 per cent this year.
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Food prices, which make up 23 per cent of the index, rose 1.7 per cent last month from a year ago, following May's 1.4-per-cent increase.
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Transport and communication costs, the second-biggest component at 22 per cent of the index, climbed 2.8 per cent last month from a year earlier.
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Housing costs, the third-largest component of the CPI, slipped 2 per cent from a year ago, after a 1.1-per-cent slide in May.
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Recreation costs, which include holiday travel, gained 3.3 per cent in June from a year ago, while prices of clothing and footwear dropped 0.2 per cent from a year earlier. — Bloomberg