The median forecast from 13 economists was for prices to have risen 8.0 percent in June from a year ago, the highest since February 1982 when inflation was 9 percent. Annual inflation in May held at a 26-year high of 7.5 percent.

"Higher car and fuel prices are expected to drive transportation costs higher, while the fuel price hikes in Malaysia last month will make food imports from Malaysia more costly," said Irvin Seah, an economist from DBS.

Food and transport costs are the two largest components in Singapore's consumer price index basket, accounting for 23 percent and 22 percent respectively.

But economists said inflation should ease in the second half of the year when the effect of a 2-percentage-point hike in sales tax in July 2007 drops off.

"Inflation will start its downward crawl from July," said Seah, adding that the central bank is unlikely to tighten monetary policy in October due to slowing economic growth.

Singapore's central bank steers monetary policy by managing the Singapore dollar within a secret trading band against a basket of currencies, rather than by adjusting interest rates.

It moved the centre of the band up in April, its most aggressive policy change since the 2003 SARS outbreak.

Seah expects inflation to ease to an average 5.6 percent in the second half of the year compared with an average 7 percent in the first five months.

A junior trade minister said on Monday inflation will ease from June, but warned that inflation "will not return to previous levels anytime soon".

From May, inflation probably rose a seasonally adjusted 0.6 percent, the median forecasts of eight economists showed, compared to 0.3 percent the previous month.

Crude oil prices averaged $140 in June and the government has increased the number of toll roads, driving up transport costs.

Economists said a fuel price hike in Malaysia, which supplies about two-thirds of Singapore's food imports, also aggravated inflationary pressures in the city-state by boosting food and raw material costs.

Malaysia raised petrol prices by 41 percent in June as part of efforts to save 13.7 billion ringgit ($4.2 billion).

                                                     
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