Singapore inflation surprisingly rose 4.3% in December

SINGAPORE: Singapore's inflation rate accelerated last month driven once again by housing and transport costs. Department of Statistics data showed the Consumer Price Index (CPI) in December 2012 rose 4.3 per cent from a year earlier, after increasing 3.6 per cent on-year in November. Accommodation cost inflation reached 8.5 per cent in December, following a 6.6 per cent gain the previous month. This was attributed largely to the costs of rented accommodation and minor repairs & maintenance which picked up sharply as a result of the disbursement of government rebates for HDB households. Imputed rentals on owner-occupied accommodation contributed 1.2 percentage points to overall inflation. In tandem with the recent surge in COE premiums, private road transport cost climbed 9.3 per cent year-on-year in December after increasing 6.7 per cent in November. Together, accommodation and private road transport costs accounted for more than two-thirds of CPI "All Items" inflation in December. Meanwhile, services inflation dipped to 2.5 per cent from 2.9 per cent, led by a decline in telecommunication charges and a more moderate rise in the costs of holiday travel and medical treatment. Food inflation eased to 1.5 per cent in December from 1.7 per cent in the previous month, as price increases for both non-cooked food and prepared meals slowed. MAS core inflation, which excludes the costs of accommodation and private road transport eased to 1.9 per cent from 2.0 per cent due to lower contribution from costs of services and food. For the whole of 2012, MAS core inflation was 2.5 per cent compared with 2.2 per cent in 2011. In a statement, the Monetary Authority of Singapore (MAS) said that given the continued weakness in the global economy, imported inflation will be "generally benign". Although the central bank warned that the persistent tightness in the labour market will support wage increases in 2013, part of the wage rises will be passed through to consumer prices. As a result, MAS core inflation is expected to average 2 to 3 per cent for the whole of 2013. - CNA/al