Consumer prices in Singapore climb 0.4%

 
  International Herald Tribune
May 25, 2005
SINGAPORE

By Amit Prakash
Bloomberg News

CONSUMER prices in Singapore gained 0.4 percent in April over the year-earlier period as the cost of food and education rose, according to government data released Tuesday, May 24.

The gain in the Department of Statistics' Consumer Price index compares with a 0.4 percent increase in March.

Consumer prices rose 0.6 percent in April from March as the cost of food, transport and housing gained. "Inflation is still quite mild, though we are seeing food prices go up because higher fuel prices have increased the cost of importing food from Malaysia and Thailand," said Song Seng Wun, an economist at G.K. Goh Holdings.

The Monetary Authority of Singapore on April 22 said inflation this year might exceed its forecast of 1 percent or less, as higher oil prices make imported goods more expensive. The central bank for the past year has been allowing the Singapore dollar to strengthen to help keep inflation in check. A stronger currency reduces the cost of oil and other imported goods.

"With higher fuel costs starting to filter through via prices of things like food, the MAS is unlikely to change its currency policy anytime soon," Song said.

Singapore's economy shrank at a 5.5 percent annual pace in the first quarter, prompting the Trade Ministry to cut its growth forecast for 2005 to between 2.5 percent and 4.5 percent from an earlier range of 3 percent to 5 percent.

Prime Minister Lee Hsien Loong's government has said growth would slow in 2005 from last year's 8.4 percent expansion because of cooling global demand for electronics, including semiconductors. The first-quarter slump was deepened by a temporary drop in production by drug makers.

Slower economic growth and higher fuel prices this year will affect consumer spending, the Monetary Authority said on April 22. Gains in tourist arrivals may slow from last year's 36 percent increase because of weaker growth in Asia.

The government on Tuesday said that consumer prices rose 0.3 percent in the first four months of the year compared with the same period in 2004.

Food prices, which make up 23 percent of the index, rose 1.7 percent from a year earlier following March's 1.5 percent gain. From March, food prices gained 0.2 percent. Prices of clothes and footwear rose 1 percent from a year earlier and gained 0.9 percent from March.

Education and stationery prices rose 1.6 percent from a year earlier, unchanged from March.

Transport and communication costs, which account for 22 percent of the index, fell 1.5 percent from a year earlier and gained 1.2 percent from March. Housing costs, the third-biggest component after food and transport, fell 0.5 percent from a year earlier and gained 1.3 percent from March.

Health care costs rose 0.3 percent from a year earlier and gained 0.2 percent from March. On a seasonally adjusted basis, consumer prices gained 0.5 percent from March, the report said.

The Statistics Department in February said it changed the base year for measuring changes in the consumer price index to 2004. Until January it used the 12 months that ended in October 1998 as the base year.


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