Tuesday, November 20, 2012

S'pore inflation down on lower house price growth

Singapore’s inflation rate may have moderated slightly in October as home prices grew at a slower pace, a sign that the rising cost of housing will remain a challenge for policymakers, Reuters reported.

According to a median forecast of 12 economists, the city-state’s consumer price index (CPI) likely rose by 4.6 percent in October compared to a year ago. This is lower than the 4.7 percent in September, but is notably higher than the historical levels of two and three percent.

At the same time, core inflation which excludes housing and car costs most likely slipped to 2.3 percent year-on-year from 2.4 percent in September.

Singapore has seen higher inflation in the past two years, primarily due to the spike in car prices and housing rents amidst a slow economy.

Moreover, the economy contracted by 5.9 percent in Q3 from the previous quarter on a seasonally adjusted annualised basis. Citigroup said that it may contract further in Q4 due to poor demand for exports.

The Monetary Authority of Singapore (MAS) also announced that headline inflation will likely inch above 4.5 percent in 2012 before slowing to 3.5 – 4.5 percent next year, as rising rents and car prices continue to push up the cost of living.

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