26 Jul 2012, 3.52PM
Original thread created on 24 Jul 2012, 6.00PM
Inflation Rises to 5.3% in June
Singapore’s inflation rose to 5.3% year-on-year in June 2012, up from 5% in May 2012.
In a joint statement released by the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI), higher accommodation and private transport costs are said to be the primary drivers, accounting for two-thirds of inflation.
However, core inflation, which excludes the costs of accommodation and private road transport, stayed unchanged at 2.7% for the third consecutive month.
With accommodation and certificates of entitlement (COE) premiums expected to remain high, inflation for the whole of 2012 is expected to come at “the upper half of the 3.5-4.5% forecast range”.
In a separate report, the Department of Statistics revealed that the lowest 20% of income earners were the worst hit by inflation in the first six months of this year.
Inflation for the lowest 20%, middle 60% and highest 20% income groups were 6.3%, 5.2% and 4.6% respectively. The overall differences between the groups stem from higher imputed rentals on owner-occupied accommodation, a statistical measure that reflects how much a household would pay if it were renting the home based on market rates.
The Department, however, says that this measure does not have an impact on the cash expenditure of most households, as many Singaporeans own their own homes. Excluding imputed rentals on owner-occupied accommodation, inflation for the three income groups were comparable at 4.1% (lowest 20% income group), 3.9% (middle 60% income group) and 4% (highest 20% income group) for the first half of 2012.
Read the joint statement by MAS and MTI
(PDF: 193KB) and the Department of Statistics’ report
(PDF:60KB). Read also The Straits Times article “Inflation likely to hit upper end of range
Updated on 26 Jul 2012
According to a Straits Times report, the Monetary Authority of Singapore (MAS) expects core inflation to fall to 2% towards the end of the year, down from 2.7% now. Core inflation excludes accommodation and private transport but measures other items such as food, education and health care.
Headline inflation will stay high, driven by housing rentals and car prices, which account for 60% of inflation. The MAS expects headline inflation to come in between 4% and 4.5%, a narrowing of the previous estimate of 3.5% to 4.5%. July's inflation is expected to ease to 4 per cent from the previous month's 5.3%.
While fighting inflation remains a top priority for the MAS, the focus is also on the risks to growth, with the central bank warning that growth could slip below 1% this year. Speaking at the MAS' annual report briefing, its managing director, Mr Ravi Menon, said that Singapore's current forecast of between 1% and 3% is based on three key assumptions: (1) That the US does not fall into recession; (2) That the euro zone crisis does not escalate; and (3) That China's economy does not cool too fast.