Its full-year forecast range for CPI inflation is now 5 per cent to 6 per cent, up from 4.5 per cent to 5.5 per cent. This is the second time it has revised its forecast since the start of the year.
Mr Menon said the revised forecast is still consistent with earlier expectations of a moderation in inflation during the second half of the year, particularly as the impact of last year's increase in the goods and services tax wears off.
When asked if he expected inflation to climb higher than last month's 7.5 per cent or if it had peaked, Mr Menon said global uncertainty made it difficult to be sure what will happen.
'We feel inflation is peaking around current levels, but global trends such as oil prices are still uncertain, so we cannot say if it has peaked yet.
'However, we don't see it going much higher than it is today.'
He explained that the MTI had based its forecasts on an expected average oil price of US$110 a barrel for this year.
'This is significantly higher than for last year and will feed into domestic inflationary pressures here, but we do not expect major upwards spiralling of oil and food prices, and have not built a major correction into our forecast.'
Crude oil prices have been trading this week at record highs of about US$135 a barrel.
Mr Ong Chong Tee, the deputy managing director of the Monetary Authority of Singapore, said the central bank's monetary policy stance of an appreciating Singdollar, adopted last month, is still appropriate given the current scenario.
The bank's chief tool for tackling inflation is its monetary policy, which is implemented by steering the exchange rate of the Singdollar against the currencies of Singapore's major trading partners.
When asked if the new inflation expectations would necessitate a policy change or an interim meeting ahead of the bank's planned October meeting, Mr Ong said such moves would not be necessary.
'The policy stance taken in April was not a knee-jerk response but a carefully calibrated decision, and there are no plans to adjust it or for a meeting before October.'
Mr Menon said that if inflation surges past current expectations, it could have a long-term impact on growth.
'But we do not expect this to happen this year. We are maintaining our gross domestic product growth forecast at 4 per cent to 6 per cent, and this is predicated on global expectations.'
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