Singapore Inflation at Highest in 14 Years on Food, Fuel

Pressure was heaped on monetary policy makers to do more to fight price gains after Singapore's key core inflation measure climbed to the highest level in almost 14 years.

The Monetary Authority of Singapore and the Ministry of Trade and Industry said that the core inflation gauge rose 4.8% in July from a year ago. The median estimate in a survey was 4.7%, which was the highest since November 2008

Headline inflation went up to 7% in June from 6.7% in June. The print was close to the median.

The MAS uses the exchange rate as their main policy tool and they expect the core inflation measure to peak in the third quarter. If the situation gets worse, the central bank may have to tighten policy again at its October meeting.

The core gauge is projected to come in between 3% and 4%, with the all-items measure at between 5% and 6.

Economists in a recent survey predicted that core price growth will peak in the final quarter of this year, while headline inflation will start to decline after the third quarter. The analysts expected core inflation to be 4% and headline to be 5.6%.

Another sizable rise in Singapore CPI inflation in July, after a 0.9-percentage-point pickup in June, builds the case for the Monetary Authority of Singapore to tighten policy again at its next meeting in October.

-- Tamara Henderson, Asean economist

For the full note, click here

The policy band is likely to be re-centered before the October meeting according to analysts at the two firms.

The cost of living is the top of everyone's mind according to Singapore Prime Minister Lee Hsien loong. The government is doing everything it can to help the most vulnerable households cope with inflation and will be ready to do more if the outlook gets worse.

In June of this year, the government announced a S$ 1.5 billion package that included direct payments and household utilities refunds.

Tomoko and Kevin Varley assisted.