In August, inflation in Singapore increased more than expected as the island state struggled with expensive commodity imports and increasing food prices. The core consumer price index (CPI) increased at an annualised rate of 5.1 per cent in August.
Including volatile items such as private transport and accommodation, Singapore’s CPI inflation grew 7.5 per cent in August, above last month’s reading of 7.0 per cent. Transport and Food costs were the largest contributors to price pressures in August, given that the island state imports almost all of its grain and fuel.
The readings further supported the view that the Monetary Authority of Singapore (MAS) is likely to tighten monetary policy when it meets in October. The central bank forecast core CPI to end the year between 3 per cent and 4 per cent, while overall inflation will trend between 5 per cent and 6 per cent.
This year, Singapore was hit hard by growing commodity prices, given the city’s large dependence on imports. The MAS said this trend would likely continue due to rising inflation in most of its trading partners.
Also, strength in Singapore’s labour market and wages has kept spending upbeat, pushing prices upwards. The MAS tightened policy three times this year. It is likely to continue doing so to offset raised inflationary pressures.
