Singapore April inflation rate up as housing costs soar

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Singapore inflation hit a slightly higher-than-expected 5.4 per cent in April, increasing the chance that it may exceed a government forecast for the year and putting pressure on the central bank to keep a tighter monetary policy.

A Reuters poll of 12 economists had forecast a rise of 5.3 per cent. In March, the year-on-year inflation rate surprisingly spiked to 5.2 per cent from 4.6 per cent the previous month.

Headline inflation "could average around 5 per cent year-on-year in the first half of 2012 before easing gradually in second half," the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry said on Wednesday in a statement reporting the April data.

"Accommodation cost will remain the largest contributor to inflation this year as leasing contracts continue to be renewed at rentals that are considerably higher than those under existing contracts, especially in the (public housing) segment," it said.

The central bank reiterated its forecast for headline inflation of 3.5-4.5 per cent for 2012 and for core inflation, which excludes private road transport and accommodation costs, of 2.5-3.0 per cent.

But the latest data makes some analysts wonder if inflation can be low enough in the second half to stay under 4.5 per cent for the year.