SINGAPORE'S December consumer prices rose a seasonally adjusted 0.5 per cent from November, taking annual inflation to over a 25-year high on rising food and transport costs.
Compared with December 2006, the Consumer Price Index (CPI) in December last year was 4.4 per cent higher, the Department of Statistics said in a statement yesterday.
The monthly rise was in line with economists expectations and took last year's inflation up 2.1 per cent from the previous year.
The increase reflected partly the 2 percentage point hike in the Goods and Services Tax (GST) in July last year. Healthcare costs saw the highest increase, by 4.1 per cent last year.
Economists expect Singapore to maintain its policy of a gradual and modest appreciation of the Singapore dollar to tame inflation.
Most analysts expect inflation to climb in the coming months to a near three-decade high of 5 per cent, as surging
costs for housing, transport, food and electricity tariffs push up consumer prices.
"The risk of inflation is definitely on the upside," said HSBC economist Prakriti Sofat.
"We expect inflation to peak around 5 per cent in 2008."
Ms Sofat said she expected the central bank to allow a rising Singapore dollar to keep inflation in check.
The latest inflation figures from the Department of Statistics in descending order:
Healthcare: Makes up 5 per cent of the index. Prices climbed 4.1 per cent last year, reflecting higher charges for daily ward and medical treatment, specialist services, general medical consultation, dental treatment, and more expensive Chinese herbs.
Recreation and others: Make up 17 per cent of the index. Prices rose 3.2 per cent last year, a result of higher cost of holiday travel, salary for foreign maids and more expensive cigarettes.
Food: Makes up 23 per cent of the index. Food prices rose 2.9 per cent last year due to more expensive cooked food, fresh vegetables, milk products and fruits.
Transport and communication: Make up 22 per cent of the index. Transportation and communication
costs climbed 2.0 per cent in 2007, contributed by higher taxi fares, car prices and more expensive petrol.
Education and stationery: Make up 8 per cent of the index. Prices rose 1.3 per cent last year.
Clothing and footwear: Make up 4 per cent of the index. Prices rose 0.6 per cent last year.
Housing: Makes up 21 per cent of the index. Housing costs climbed 0.4 per cent last year, due to higher costs for both owner-occupied and rented accommodation more than offsetting lower electricity tariffs.
The Monetary Authority of Singapore expects consumer prices to increase between 3.5 per cent and 4.5 per cent this year, after averaging 2.1 per cent last year. The central bank had forecast inflation to average 2 per cent last year.
