Singapore inflation to moderate between +3.8% to +4% in 2013

Housing glut will keep it in check.

Here's more from Maybank:

We trim slightly our 2013 inflation rate forecast to +3.8% from +4.0%, primarily to factor in a slower rise in imputed rentals on owner-occupied accommodation as more supply of housing comes on stream and following the recent comprehensive property market tightening measures. Additional mitigating factors on domestic inflation include government rebates (e.g. utilities rebate).

Overall, inflation will largely be driven by domestic factors such as the cost of private road transport as well as the persistent tightness in the labour market translating into wage increases and in turn consumer prices. Private road transport cost will continue to be a major contributor to inflation this year, especially given the persistent rise in COE premiums on the back of smaller supply of COEs this year. Officially, Monetary Authority of Singapore and Ministry of Trade And Industry (MAS-MTI) sees headline inflation rate to moderate to between +3.5% and +4.5% while core inflation rate is expected to be between +2% and +3%.

Exchange rate policy will be key in keeping imported inflation in check amid domestic price pressures. Our FX Research Team does not expect any change in current policy stance by MAS at the next policy review in Apr 2013. Therefore, SGD/USD exchange rate is projected to sustain its gradual upward path, ending this year at 1.19 from 1.22 at the end of last year.