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Singapore Inflation Edging Up

Singapore Inflation Edging UpSingapore Inflation Edging Up

Singapore inflation will keep inching up this year driven mainly by pricier oil but overall price pressures will stay muted, the Monetary Authority of Singapore said Thursday.

It pointed to uneven economic growth and the fragile labor market as factors that will help keep prices in check, CNA reported.

It also noted in its latest macroeconomic review that recent policy changes like the water price hike and diesel tax restructuring will mean higher household and business costs in the short term.

Inflation will keep inching up this year driven mainly by pricier oil but overall price pressures will stay muted, the MAS said. It pointed to uneven economic growth and the fragile labor market as factors that will help keep prices in check.

Inflation will rise this year but stay below 2%, it said. Core inflation—which strips out accommodation and private road transport costs to better gauge everyday expenses—rose to 1.3% in the first three months of this year from 1.2% in the fourth quarter. This was due largely to higher prices of oil-related items.

The MAS expects oil to average about $53 a barrel this year, about 20% up on last year.

Administrative cost rises—such as the water price hike unveiled in Budget 2017—will also contribute to a temporary pickup in inflation, though subsidies will offset the impact for eligible households. For example, the direct impact of the water price hike is estimated to add around 0.1 percentage point to both headline and core inflation this year.

“These administrative cost measures are in line with the need to reflect the true underlying scarcity value of resources,” the MAS said.

 

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