Singapore's Oct inflation slows on oil price fall
Reuters - 1 hour 39 minutes ago
By Neil Chatterjee
SINGAPORE, Nov 24 - Singapore's annual inflation slowed slightly to 6.4 percent in October after a fall in oil prices, leading economists to expect the central bank to wait with more monetary policy loosening until prices ease further.
From the previous month, the consumer price index rose 0.8 percent after seasonal adjustments, the Department of Statistics said in a statement on Monday. (For a graphic of the data, see https://customers.reuters.com/d/graphics/SG_CPI1108.gif)
Economists said central bank the Monetary Authority of Singapore , which says it has no plans to loosen policy before an April review, might wait until inflation eases next year.
"It's certainly not going to raise any inflation concerns -- it's just an indication that it's going to take a little longer to come down," said David Cohen of Action Economics. "The MAS is not going to be in any hurry to adjust monetary policy."
The central bank sets policy by managing the Singapore dollar against an undisclosed basket of currencies.
It eased policy in October, shifting from currency appreciation to a neutral bias for the dollar, to head off a global financial storm that has pushed the country into a recession. The Singapore dollar has been weakening in anticipation of a further policy easing.
The Singapore dollar <SGD=D3> stood at 1.5298 against the U.S. dollar by 0544 GMT, compared with 1.5292 before the data.
Annual inflation slowed from 6.7 percent in September and its 26-year high of 7.5 percent recorded in April-June. Analysts say inflation has peaked, partly as the effects of a 2-percentage-point rise in sales tax last year dropped out from annual calculations.
The unfolding financial crisis, which threatens to push the global economy into a recession as well as falling commodity prices are expected to tame inflation, which has been easing around the region.
A sub-index for housing costs was up 16.4 percent in October from a year ago, while food prices, which carry the largest weighting in the index, rose 7.8 percent. Transport and communications fell just 0.2 percent despite sliding oil <CLc1>.
"It is still slowing down and still sticky in the sense it has not come off as much as we would like to see," said economist Song Seng Wun of CIMB. "We may see a more aggressive monetary policy loosening move from next year onwards."
The government said on Friday inflation would moderate sharply in 2009 to 1-2 percent, slashing its previous forecast of 2.5-3.5 percent, and said the economy may shrink next year [ID:nSP422160]. (Additional reporting by Matthew Webster and Laurence Tan; Editing by Tomasz Janowski)
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