Singapore: Government raises 2011 inflation forecast
January 23, 2011
In December, consumer prices increased 0.2% over the previous month. The reading came in below the 0.3% rise registered in November but represented a strong acceleration compared to the 0.5% drop tallied in December 2009. As a result, annual inflation jumped to 4.6% in December (November: 3.8% year-on-year), which was a notch above the 4.5% expected by market analysts and marked the highest rate of inflation since December 2008. The monthly rise reflected higher prices for transport (+2.6% month-on-month), although these were partially offset by lower housing costs (-1.1% mom). Moreover, annual average inflation ended the year at 2.8%, up from a mild 0.6% for the full year 2009. The Monetary Authority of Singapore (MAS) conducts its monetary policy through the management of the exchange rate, instead of using interest rates. Monetary authorities last tightened their policy stance on 14 October, when they announced they would increase the slope of appreciation of the Singapore dollar, without changing the level at which the band is centered.