Inflation expected to be 1.5 - 2.5% this year

The Monetary Authority of Singapore (MAS) has cut its inflation forecast for the year to between 1.5 and 2.5 per cent, from between 2 and 3 per cent.

This reflects a "weaker outlook for imputed rentals over the rest of the year," MAS said in its half-yearly monetary policy statement.

"Amid the large supply of newly-completed housing units, imputed rentals on owner-occupied accommodation are now expected to stabilise," it said.

It expects car prices to add only negligibly to inflation.

But it warned that domestic cost pressures, especially those stemming from a tight labour market, would remain the main source of inflation.

"Firms are expected to continue to pass on accumulated costs, which could lead to broad-based price increases across the economy," the statement said.

This article was published on April 15 in The New Paper.

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