Singapore: Inflation rises to highest level in more than two years
February 23, 2011
In January, consumer prices soared 1.6% over the previous month. The reading came in well above the 0.2% rise registered in December and more than doubled the 0.7% increase tallied in January 2010. The monthly rise reflected higher prices for transport (+5.8% month-on-month) and housing (+2.7% mom), partly offset by lower prices for communication and recreation. Owing to the pronounced price increase, annual inflation jumped from 4.6% in December to 5.5% in January, overshooting market expectations and marking the highest level since November 2008. Annual average inflation followed suit, rising from 2.8% in December to 3.3% in January. The Monetary Authority of Singapore (MAS) conducts its monetary policy through management of the exchange rate, rather than interest rates. Monetary authorities last tightened their policy stance on 14 October, when they announced an increase in the slope of appreciation of the Singapore dollar, without changing the level at which the band is centered. Given recent spike in inflation, private sector analysts begin to foresee the MAS allowing the Singapore dollar to appreciate even further in an attempt to curb the recent acceleration in consumer prices. The MAS will meet in April to review its monetary policy setting.