Singapore Jan CPI +4.8pc, lowest since May

SINGAPORE: Singapore's consumer price index (CPI) rose 4.8 percent in January from a year ago, the government said on Thursday, in line with the 4.75 percent consensus forecast of economists polled by Reuters.

January's reading was lower than December's 5.5 percent and marked the first time year-on-year inflation has come in below the 5 percent level since May 2011.

But the central bank's core inflation measure accelerated to 0.9 percent month-on-month and 3.5 percent year-on-year, from 0.2 percent month-on-month and 2.6 percent year-on-year in December.

Singapore's core inflation excludes the cost of accommodation and private road transport, which are strongly influenced by government policy.

The Monetary Authority of Singapore (MAS) and Ministry of Trade and Industry (MTI) said in a joint statement that headline inflation "will likely remain elevated and volatile over the next few months."

"We have been expecting inflationary pressure to lower this year given the weaker global economic outlook. But it is likely to be a gradual process."

"CPI may stay sticky at elevated levels for the next few months as car prices are still high with the tight COE supply and rental prices remain elevated."

"It will take a few more months before the effectiveness of the latest round of property market measures kick in to cool the real estate sector."

"Notwithstanding the strong economic numbers in the US, global economies continue to face headwinds due to restrained fiscal conditions in the US and Europe and cautious business sentiment."

"Looking forward, we expect upward pressure on the Singapore dollar to continue to abate. The market will gradually form expectations that monetary policy could revert to a neutral stance as inflationary pressures ease."

"Singapore's first CPI reading for 2012 might have come in lower than 5 percent plus year-on-year rises last year, but that is mainly on a high base effect."

"January's numbers might be distorted by the Chinese New Year effect and we would look to February's number for a clearer picture."

"Our forecast indicates that even if inflation comes in within range, it will end up in the higher end. In fact, there is a 50 percent chance that inflation will come in higher than expected."

"It's higher than expected and it was mainly driven by housing. Going forward, inflation is likely to remain high in the first quarter, at an average of around 4.7 percent. In the next 1-2 months, the higher COE (certificate of entitlement for cars) prices will also keep inflation high."