SINGAPORE, Jan 23 — Consumer prices in Singapore rose in December for the first time in more than two years, adding to signs of recovery in the city-state’s economy.
CPI rose 0.2 per cent from a year earlier, compared with unchanged prices in November. The median estimate of 16 economists in a Bloomberg survey was for a 0.1 per cent gain. Prices increased 0.2 per cent in the month.
Core inflation, which excludes costs of accommodation and private road transport, rose 1.2 per cent in December from a year earlier, in line with the median forecast
Lower oil costs and government measures to rein in property values have driven consumer prices down in the trade-dependent economy since November 2014.
The Monetary Authority of Singapore, which uses the exchange rate as its main policy tool rather than interest rates, had forecast a pick-up in inflation to between 0.5 percent to 1.5 per cent this year.
That may give it reason to stick to its neutral policy stance at its next scheduled meeting in April at a time when exports are starting to grow.
The CPI increase was “on the back of rising petrol prices,” said Jonathan Koh, an economist at Standard Chartered Plc in Singapore. “In 2017, we expect prices to continue to pick up” to average 1.1 per cent. The data is “in line with what the MAS has forecast,” he said.
“At the moment, we don’t expect any changes in MAS policy.” “On the external front, imported inflation is likely to rise modestly on the back of a turnaround in global commodity markets,” the MAS and Ministry of Trade and Industry said in a joint statement.
“Domestically, overall cost pressures should be muted. Amid a pullback in hiring, conditions in the labor market have slackened. This will cap underlying wage growth, even as non-labor business costs have eased.”
Food prices, which make up about 22 per cent of the consumer price basket, rose two per cent in December from a year earlier. The biggest rise in prices on an annual basis was for education, which increased 3.2 per cent.
The MAS and MTI see core inflation averaging 1 percent to 2 percent this year, compared with 0.9 per cent in 2016, though the pick-up will be gradual because of a lack of demand pressures. — Bloomberg