Sunday, July 25, 2010

Singapore's Consumer Prices Rise a Sixth Month on Transport, Housing Costs

Singapore’s consumer prices rose for a sixth month in June as an increase in car and electricity prices pushed transportation and housing costs higher.

The consumer price index climbed 2.7 percent from a year earlier, Singapore’s Department of Statistics said in a statement today. That was less than the 3.5 percent median estimate of eight economists surveyed by Bloomberg News. Prices fell 1 percent from May, without adjusting for seasonal factors.

Singapore expanded at a record pace in the first six months of 2010, putting the economy in contention for the world’s fastest-growing this year. Faster inflation this year may prompt the central bank to maintain a policy of allowing the currency to appreciate to contain prices at its next review in October.

“You have to nip the inflation threat as quick as possible,” Geoff Howie, a senior vice president at MF Global Singapore Ltd., part of the world’s largest broker of exchange- traded futures and options, said before the report. “We see more gradual and modest appreciation” of the Singapore dollar.

The Monetary Authority of Singapore, which uses the currency instead of interest rates to conduct monetary policy, said in April it would undertake a one-time revaluation of the currency and allow a gradual and modest appreciation. Inflation will probably average between 2.5 percent and 3.5 percent this year, the central bank said.

Housing prices, the biggest component of the consumer price index, climbed 2.3 percent from a year earlier, and transport costs increased 10.3 percent. Food prices rose 1.2 percent.

The cost of buying cars and motorcycles has surged as rising demand and falling supply caused the prices for some vehicle permits to more than double since the end of December. Singapore controls pollution and congestion on its roads by selling a limited number of permits every year for each category of vehicles.

As posted in Bloomberg by Shamim Adam

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