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Singapore's
inflation quickens to highest since 1982
Shamim
Adam
Bloomberg
23 Jan
08
http://www.bloomberg.com/apps/news?pid=20601080&sid=aD2EDFSqHknk&refer=asi
Singapore's
inflation accelerated in December to the highest since 1982,
placing pressure on the central bank to allow faster gains in the
currency.
The consumer price index jumped 4.4 percent
from a year earlier, after gaining 4.2 percent in November, the
Department of Statistics said today. Economists had forecast a
4.3 percent increase. Prices rose 0.5 percent from November.
The Monetary Authority of Singapore, which expects
consumer prices to rise this year at more than double the 2007
pace, in October said it would allow a "slightly'' faster
appreciation in the Singapore dollar. Economists expect the
central bank to maintain that stance or say it will tolerate even
bigger gains in the currency in its next policy statement in
April.
"There is no sign that inflation pressures
are abating,'' said Joseph Tan, Asian strategist at Fortis Bank
SA in Singapore. "The central bank will probably want to
steepen the pace of appreciation in the Singapore dollar.''
Asian central banks including Singapore's are combating
rising prices at a time when growth in the U.S., the biggest
market for most of the region's export-reliant economies, is
slowing. The Federal Reserve yesterday lowered its benchmark
interest rate by three quarters of a percentage point, its first
emergency cut since 2001, amid signs of a U.S. recession.
Singapore's monetary authority expects consumer prices to
increase between 3.5 percent and 4.5 percent this year, after
averaging 2.1 percent in 2007. The central bank had forecast
inflation to average 2 percent last year.
Stronger
Currency
The Singapore dollar has gained 6.6 percent
in the past year. A stronger currency helps cool inflation by
making imports cheaper. The central bank seeks to keep the dollar
from rising or falling outside an undisclosed band based on a
basket of currencies of the city's biggest trading partners.
The currency increased 0.6 percent to S$1.4388 per U.S.
dollar as of 1:06 p.m. in Singapore, from S$1.4467 yesterday. The
Straits Times Index was little changed, after gaining as much as
4.3 percent in morning trading.
The central bank has
sought a "gradual and modest'' strengthening in the currency
since April 2004.
Food prices, which make up 23 percent
of the index, rose 5.5 percent in December from a year ago,
following November's 5.2 percent increase. From November, food
prices gained 0.6 percent, and were 2.9 percent higher for the
whole of 2007.
Transport and communication costs, the
second-biggest component at 22 percent of the index, climbed 6.4
percent in December from a year earlier. From November, transport
and communication prices rose 1.2 percent.
ComfortDelGro
Corp., Singapore's biggest taxi company, raised cab fares by as
much as 49 percent last month. Bus fares had also been increased
in recent months, while the government raised road tariffs for
motorists.
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