Prices are on the rise in Singapore as food, transport and housing became more expensive due to the high price of oil. The country’s CPI gained 0.3% on a seasonally adjusted basis, after it stayed flat in February. Singapore already had to deal with a rise of the CPI by 2.8% in 2010.

The country’s main electricity provider, Singapore Power Ltd. will increase its tariffs by a monthly average of 6.5% in the upcoming quarter if oil prices remain high. Elevated electricity prices already caused housing costs to go up
7.1% while transportation costs surged to 13.4% because of the higher prices of petrol and cars.

The country’s central bank, MAS, has decided to allow further appreciation of local currency dollars in order to maintain the public’s purchasing power. While most Asian central banks raised their interest rates to allow their currencies to gain, MAS uses a set exchange rate band for the local dollar controlling major fluctuations.

The MAS warned that the country’s inflation could top 4% this year. Only in February, the government had raised the inflation forecast from the 2-3% to the 3-4% bracket.

“Food inflation is rising despite a strong Singapore dollar while oil prices have continued to escalate despite the gradual stabilization in the Middle East and North Africa political crisis”, Irvin Seah from DBS Group Holdings Ltd. in Singapore said. He claimed that “chance is high that inflation will remain stuck at an uncomfortably high range of 4.5 to 5.5 percent in the coming months before easing off in the second half of the year”.