Inflation remained elevated but moderated somewhat to 4.6% in
2012 from 5.2% in 2011. The largest contributors to inflation in 2012 were
housing and transportation, the latter driven by rising prices ...
quota premiums (Figure 3.29.3). Food price hikes eased as world prices
declined and the Singapore dollar appreciated. Core inflation, which
excludes the costs of housing and private road transport, averaged 2.6% in
2012, up from 2.2% in 2011.
Given Singapore’s open capital account and its use of an undisclosed
exchange rate band to execute monetary policy, interest rate and money
supply developments are largely outside the control of the Monetary
Authority of Singapore. To contain inflationary pressures, the authority
has maintained since April 2010 a tightening bias, leading to an
appreciation of the nominal effective exchange rate by 5.9% in 2012,
compared with 0.2% in 2011 (Figure 3.29.4). Interest rates remain lower
than those in the US (Figure 3.29.5). Money supply growth moderated
to 7.2% from 10% the previous year as economic activity slowed. Credit
expansion decelerated, with credit to the private sector expanding by 17%
in 2012, down from 30% in 2011.
Fiscal and macroprudential measures were tightened in 2012 to
complement the central bank’s contractionary stance and discourage
speculation in the property market. Stamp duty tax on property
purchases were raised from 10% to 15% for foreigners, and introduced at
5% for permanent residents; the loan-to-value ratio for mortgages was
lowered from 60% to 50% for a second property.
Source: Ministry of Trade and Industry. 2012. Economic Survey of Singapore
. www.mti.gov.sg , Bureau of International Settlements; CEIC Data
Company (accessed 6 March 2013)
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