Country Report Singapore March 2011

Economic performance: Consumer price inflation accelerates to a 25-month high

Inflation accelerated again in January, with consumer prices rising by 5.5% year on year-up from 4.6% in December, and the fastest rate since December 2008, according to the Department of Statistics. On a seasonally adjusted month-on-month basis prices rose by 1.3% in January, compared with an increase of 0.9% in December. Higher transport costs were the main contributor to inflation, rising by 18.4% year on year. As well as higher prices for Certificates of Entitlement (state-auctioned licences to purchase private vehicles), prices for which have risen sharply in the past two years or so in line with attempts to ease traffic congestion, an increase in the cost of fuels also contributed to the jump in inflation in January. On a month-on-month basis, transport costs rose by 5.8%. But inflationary pressures were evident across all but two of the categories of goods and services that make up the consumer price index (CPI). The cost of food rose by 2.8% year on year in January, up from 2.1% in the previous month. Inflation also accelerated in the clothing and footwear category of the CPI (to 0.2%), in housing (to 5.3%), in education and stationery (to 3.8%) and in healthcare (to 3%). Prices for communications and for recreation and "other" goods and services were the only ones to have recorded slower inflation in January than in December, rising by 0.6% and 0.7% respectively.

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