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Singapore’s inflation rate rose to the highest level since January 2009, an acceleration that may put pressure on the central bank to allow further currency appreciation to curb price increases.
The consumer price index climbed 3.8 percent in November from a year earlier, after gaining 3.5 percent in October, Singapore’s Department of Statistics said in a statement today. That matched the median estimate of 14 economists surveyed by Bloomberg News. Prices rose 0.3 percent from October, without adjusting for seasonal factors.
Singapore’s economic expansion this year has fueled prices, prompting the central bank to allow faster currency gains and leading the government to implement measures to cool the property market. The Monetary Authority of Singapore uses the exchange rate instead of interest rates to manage inflation, which it forecasts may quicken to about 4 percent by the end of 2010 and “stay high” in the first half of 2011.
“Rising food, transport and housing costs, compounded by escalating wage pressures, will likely keep inflation above 4 percent in early 2011,” Chua Hak Bin, a Singapore-based economist at Bank of America Merrill Lynch, said before the report. “MAS will have to stay tight, in our view, with the risk for further tightening in April next year.”
The central bank said in October it will steepen and widen the currency’s trading band while continuing to seek a “modest and gradual appreciation,” after undertaking a one-time revaluation in April this year. The Singapore dollar has gained more than 7 percent against the U.S. currency this year.
Consumer prices will probably rise 2.8 percent this year, and 2.9 percent in 2011, according to the median estimate in a survey of 22 economists by the central bank released this month. Inflation will average between 2 percent and 3 percent next year, the central bank predicts.