High inflation to persist till 2H12

February's easing was a seasonal fluke and inflation will hover around the 5% yoy range, says the government.

Likewise, core inflation will stay at roughly 3% yoy at least for the next few months, before it and CPI-All Items inflation both moderate gradually, predicts the Monetary Authority of Singapore (MAS) and Ministry of Trade and Industry (MTI).

Here's more from the MAS and MTI:

CPI-All Items inflation will likely remain elevated in H1 2012, while MAS Core Inflation could stay at around 3% in the next few months. The slight decline in February’s CPI was due to the seasonal fall in the costs of non-cooked food and holiday travel and temporary drop in COE premiums. However, inflationary pressures since late last year have been more persistent than expected. Both CPI-All Items inflation and MAS Core Inflation will remain elevated over the next few months, at around 5% and 3% y-o-y, respectively, before moderating gradually.

At this stage, the 2012 forecasts for CPI-All Items inflation and MAS Core Inflation remain at 2.5-3.5% and 1.5-2.0% respectively. These projections are predicated on some moderation in domestic and external cost pressures in the second half of the year given the generally sluggish economic environment.

MAS and MTI are monitoring price trends closely and will review the forecasts if underlying price
pressures turn out to be more persistent.