Singapore inflation likely held steady in November

SINGAPORE: Singapore's inflation held steady in November as a jump in car prices was offset by a slower rise in housing and food prices, a Reuters poll showed.

According to the median forecast of nine economists, Singapore's consumer price index (CPI) likely rose by 4.0 percent in November from a year ago, the same pace as in October but still well above historical levels of 2-3 percent.

"Favourable base comparisons are keeping the yearly rate stable despite a 0.5 percent monthly increase in headline prices," said ANZ's head of economics for Southeast Asia, Aninda Mitra.

Economists say that although headline inflation has slowed from a high of 5.4 percent in April, helped by a fall in fuel prices and high year-ago base, Singapore faces pressures arising from a tight job market that has pushed up the cost of services.

For example, healthcare costs rose 5.2 percent in October from a year ago, faster than the average of 4.4 percent for the first 10 months of the year.

In the first 10 months of this year, inflation averaged 4.7 percent compared with a year ago.

Singapore has been suffering from higher-than-usual inflation over the past two years, led by a spike in housing rents and car prices.

Due to the soaring price of certificates of entitlement (COEs) that are needed to sell a new car, a new Toyota Vios now costs around S$125,000 ($102,700), up from about S$74,000 at the start of the year.

Singapore's economy contracted by 5.9 percent in the third quarter from April-June on an annualised and seasonally adjusted rate. But employers are struggling to fill lower-end positions such as waiters and cleaners, due to government measures that make it harder for employers to hire cheap labour from abroad.

According to the Manpower Ministry, Singapore's unemployment rate stood at 1.9 percent in the third quarter of the year, down from 2.0 percent in the April to June period.

Singapore's central bank expects headline inflation for 2012 to come in slightly above 4.5 percent before slowing to 3.5 to 4.5 percent next year.