Singapore inflation hit a slightly higher-than-expected % in April, increasing the chance that it may exceed a government forecast for the year and putting pressure on the central bank to keep a tighter monetary policy.
A Reuters poll of 12 economists had forecast a rise of 5.3%. In March, the year-on-year inflation rate surprisingly spiked to 5.2% from 4.6% the previous month.
Headline inflation “could average around 5% year-on-year in the first half of 2012 before easing gradually in second half,” the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry said on Wednesday in a statement reporting the April data.
“Accommodation cost will remain the largest contributor to inflation this year as leasing contracts continue to be renewed at rentals that are considerably higher than those under existing contracts, especially in the (public housing) segment,” it said.
The central bank reiterated its forecast for headline inflation of 3.5-4.5% for 2012 and for core inflation, which excludes private road transport and accommodation costs, of 2.5-3.0%.
But the latest data makes some analysts wonder if inflation can be low enough in the second half to stay under 4.5% for the year.
Song Seng Wun, economist at CIMB, said that upward pressure from premiums that Singapore charges car buyers and housing costs will put inflation in the 4.5-5.0% range for the full year.
Wai Ho Leong, regional economist at Barclays, said that with wages rising, inflation “is going to be surprisingly high for the next two months” at around 5% and “possibly even higher”.
Source: PropertyReport – 2012 May 22
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