SINGAPORE'S consumer prices rose an expected seasonally adjusted 0.2 per cent in February from January, government data showed on Monday, while annual inflation edged lower from a 25-year high seen the previous month.

The Ministry of Trade and Industry (MTI) said the underlying inflation momentum remained the same as the past two months, and it was keeping its 2008 inflation forecast of 4.5 to 5.5 per cent.

From a year earlier, prices rose 6.5 per cent in February - off January's 6.6 per cent - reflecting higher costs for housing, food, transport and communication, the Department of Statistics said in a statement.

Compared to February a year ago, food prices, which make up 23 per cent of the index, rose 6.7 per cent last month, following January's 5.8 per cent increase.

Transport and communication costs, the second-biggest component at 22 per cent of the consumer price index, climbed 7.6 per cent in February from a year earlier. From January, transport and communication prices fell 0.1 per cent.

Oil prices breached US$110 (S$153) a barrel this month, increasing fuel and transport costs for consumers.

Housing costs, the third-largest component of the price index, climbed 8.8 per cent from a year ago. The increase came as the government raised property valuations for public housing at the beginning of the year. From a month ago, housing prices rose 0.5 per cent.

Underlying inflation remains stable
In a separate statement on Monday, the MTI said it was maintaining its current 2008 inflation forecast at 4.5 to 5.5 per cent.

It said the three-month moving average (3MMA) increase of 0.8 per cent in the February CPI indicated that the 'underlying momentum in inflation remained stable'.

Noting that the 3MMA has stayed around 0.8 per cent since the middle of last year, the ministry said: 'The underlying inflation momentum is expected to decline during the course of the year.

'For 2008 as a whole, MTI maintains the current forecast of CPI inflation at 4.5-5.5 per cent.'

Most economists had expected annual consumer prices to stay around 6.5 per cent in February as strong demand during the Lunar New Year holiday supported food and clothing prices, said a Reuters report.

Higher income group faced higher inflation in 2nd half of 2007
Data released by the Department of Statistics (DOS) earlier on Monday showed that the lower-income households in Singapore were not as badly hit by inflation as those in the middle and higher-income groups in the second half of last year.

The inflation rate for general households from July-December 2007 last year was 3.4 per cent, and for the whole year, it was 2.1 per cent, compared with 1 per cent a year go.

For the second half year, the consumer price index (CPI) rose 2.8 per cent for the lowest 20 per cent income households and 3.3 per cent for the middle 60 per cent income group.

The top 20 per cent income group experienced the highest inflation rate of 3.9 per cent, said the DOS.

This was also the trend for the whole year, with the CPIs up 2 per cent for both the lowest and middle income groups, and 2.3 per cent for the higher income group.

The higher inflation rate for the top 20 per cent income group was due mainly to increased holiday travel cost, car and petrol prices, which have relatively larger weights compared to other income groups.

The department said the CPI increases for all income groups in 2007 were due mainly to dearer food, holiday travel, accommodation, university tuition fees, taxi fares and petrol.

It also reflected the one-off increases in the goods and services tax (GST) rate in July 2007, which DOS expects to wear off in the second half of this year.

These price increases were moderated by lower electricity, tariffs, domestic refuse removal fees and government levy on foreign maids. There were also more service and conservancy charge rebates during the year.

The Singapore dollar this month rose to an all-time high versus the US currency, helping to reduce import costs even as food and energy prices rose. The Monetary Authority of Singapore, which expects inflation this year to gain at more than double 2007's pace, will release its twice-yearly review of the currency next month.

The Singapore dollar has gained 3.4 per cent this year. The central bank, which has sought a 'gradual and modest' strengthening in the currency since April 2004, said in October it would allow a 'slightly' faster appreciation in the Singapore dollar.