SINGAPORE: Singapore’s central bank has revised up its inflation forecast for 2008 for the third time. It now expects inflation to come in at between 6 and 7 per cent from its initial estimate of 5 to 6 per cent.
The Monetary Authority of Singapore (MAS) said this is due to the impact of external developments like higher oil and food prices on Singapore’s open and import—dependent economy.
But the central bank is maintaining its current monetary policy stance for a slow and gradual appreciation of the Sing dollar.
The central bank believes that inflation has peaked this year after rising 7.5 per cent for May and June. For the first half of the year, consumer inflation averaged 7.1 per cent.
Inflation is expected to moderate because the one—off impact of the GST hike last year will stop affecting headline inflation in July.
MAS also expects global commodity price increases to be milder. Domestic cost pressures are likely to ease as the economy slows and asset markets consolidate.
Recent employment surveys have also shown that labour market pressures could be easing.
Between April 2004 and June 2008, the Singapore dollar appreciated 23.4 per cent against the greenback — a policy move that the MAS said has had a restraining effect on CPI inflation.
It said its monetary policy tightening will continue to restrain cost and price pressures going forward.
For example, while oil prices have increased by more than 70 per cent from a year ago, domestic electricity tariffs and petrol prices rose only by around 30 per cent.
Despite the full—year inflation being revised up, the central bank is keeping its forecast that the Singapore economy will grow between 4 and 6 per cent this year.
The economy is likely to be supported by the construction, marine and offshore engineering and financial intermediation services sectors.
Last year, Singapore’s economy grew 7.7 per cent.
<cite class="auth">Channel NewsAsia</cite>
The Monetary Authority of Singapore (MAS) said this is due to the impact of external developments like higher oil and food prices on Singapore’s open and import—dependent economy.
But the central bank is maintaining its current monetary policy stance for a slow and gradual appreciation of the Sing dollar.
The central bank believes that inflation has peaked this year after rising 7.5 per cent for May and June. For the first half of the year, consumer inflation averaged 7.1 per cent.
Inflation is expected to moderate because the one—off impact of the GST hike last year will stop affecting headline inflation in July.
MAS also expects global commodity price increases to be milder. Domestic cost pressures are likely to ease as the economy slows and asset markets consolidate.
Recent employment surveys have also shown that labour market pressures could be easing.
Between April 2004 and June 2008, the Singapore dollar appreciated 23.4 per cent against the greenback — a policy move that the MAS said has had a restraining effect on CPI inflation.
It said its monetary policy tightening will continue to restrain cost and price pressures going forward.
For example, while oil prices have increased by more than 70 per cent from a year ago, domestic electricity tariffs and petrol prices rose only by around 30 per cent.
Despite the full—year inflation being revised up, the central bank is keeping its forecast that the Singapore economy will grow between 4 and 6 per cent this year.
The economy is likely to be supported by the construction, marine and offshore engineering and financial intermediation services sectors.
Last year, Singapore’s economy grew 7.7 per cent.
<cite class="auth">Channel NewsAsia</cite>
