Singapore’s inflation accelerated to the fastest pace since January as food and housing costs increased, sustaining pressure on the central bank to allow the currency to appreciate and contain price gains.
The consumer price index rose 5.2 percent last month from a year earlier, the Department of Statistics said in a statement yesterday. That matched the median estimate of 13 economists surveyed by Bloomberg News.
Prices fell 0.2 percent last month from May, without adjusting for seasonal factors, the statement showed. Inflation was 4.5 percent in May, according to previously reported data.
The Monetary Authority of Singapore raised its inflation forecast for this year last week, citing higher home rental and transportation costs.
The city-state’s currency has appreciated to unprecedented levels since the central bank said in April it would allow further appreciation to tame price gains, the third monetary tightening in a year.
Singapore’s consumer prices may climb 4 percent to 5 percent this year, higher than a previous forecast of 3 percent to 4 percent, central bank managing director Ravi Menon said on Thursday last week. Singapore, which uses the exchange rate as its main tool to manage inflation, said in April it would re-center the currency’s trading band higher.
The Singapore dollar has gained more than 13 percent against the US currency in the past year to be the best performer in Asia excluding Japan. It traded at S$1.2081 to the dollar at 12:28pm.
Meanwhile, currency-trading volumes averaged US$361.5 billion a day in April, a 14 percent increase from October, a survey by the Singapore Foreign Exchange Market Committee showed.
Traditional spot trading, outright forwards and foreign--exchange swaps averaged US$314.2 billion per day, compared with US$278.4 billion in October, according to the survey released yesterday.
Total volumes rose 32 percent. Daily turnover of derivatives, comprising currency swaps and options, increased 20 percent to US$47.2 billion from October, although declining 0.1 percent from April last year, the survey showed.
The semi-annual survey is based on data compiled from the trading desks of 30 financial institutions and supported by the Monetary Authority of Singapore.