World financial news

Singapore's inflation held at a 26- year high for a third straight month in June, increasing pressure on the central bank to allow further gains in the currency at a time when exports are slowing.

The consumer price index jumped 7.5 percent from a year earlier, matching May's gain, the Department of Statistics said today. That was lower than the median forecast of an 8 percent increase in a Bloomberg News survey of 18 economists. Prices fell 0.3 percent from May.

The Monetary Authority of Singapore in May raised its 2008 inflation forecast, predicting consumer prices will gain between 5 percent and 6 percent as record oil and food pushed up costs across Asia. Higher taxi fares and road-access fees and costlier food from neighboring Malaysia may keep prices elevated.

“We do not expect inflation to fall sharply'' in coming months, said Irvin Seah, an economist at DBS Bank Ltd. in Singapore. “It is more likely to exhibit a downward crawl, especially with new sources of inflationary pressure, mainly policy-induced, coming into the picture.''

The government has in recent months introduced new road tariffs or raised existing ones to ease congestion in the city- state of 4.6 million people. Singapore, which imports 90 percent of its food needs, may also face price pressures on the goods it brings in from Malaysia, where the government estimates June's inflation rate may have jumped to the highest since 1982 after it raised fuel prices.

`Decisive Tightening'

Inflation will continue to “plague'' most Asian economies on record global energy and food prices, the Asian Development Bank said yesterday. Central banks in the region need “decisive tightening of monetary policies'' to combat the rise in prices, the Manila-based lender said.

Australian inflation accelerated in the second quarter to the fastest pace in two years, the government said today.

Singapore's inflation averaged 7.1 percent in the first half. Record oil prices are increasing fuel and transport costs for consumers. The Singapore government doesn't subsidize pump prices, leading petrol companies to pass on the rising gasoline and diesel costs to car owners. Crude reached an unprecedented $147.27 a barrel on July 11.

The central bank, which expects Singapore's inflation rate to ease in the second half of the year, may review its forecast for price gains in 2008, Khor Hoe Ee, an assistant managing director at the monetary authority, said yesterday.

Stronger Currency

The central bank in April said it would allow its currency to strengthen at a faster pace against the U.S. dollar, saying the exchange rate remains its most effective tool to fight inflation. The Singapore dollar has climbed 5.8 percent in 2008.

Food prices, which make up 23 percent of the index, rose 9.2 percent in June from a year ago, following May's 9 percent increase. From May, food prices gained 0.6 percent.

Transport and communication costs, the second-biggest component accounting for 22 percent of the consumer price index, climbed 5.1 percent in June from a year earlier. From May, transport and communication prices fell 0.2 percent.

ComfortDelGro Corp., Singapore's biggest taxi company, last week introduced a 30 Singapore cents (22 U.S. cents) fuel surcharge on cab rides to help its drivers offset the rising cost of oil. The company operates more than 15,000 cabs in the city-state.

Housing costs, the third-largest component of the price index, climbed 13.4 percent from a year earlier. From the previous month, housing prices declined 1.7 percent.

Sourse