Oil price movement to affect Singapore inflation:OCBC

Crude oil price has sustained above US$100/barrel for the best part of the past two weeks.

According to OCBC, the Libyan unrest spells problems for policymakers, as they have to grapple with the anticipated spike in inflation and dampened economic sentiment.

OCBC estimates how much a US$10/barrel rise in crude oil price will affect headline inflation in the region. They usethe 2007-2008 episode as comparison, and estimate the additional inflationary pressure derived from the rise in crude oil price on top of the trend inflation for EM-Asia countries.

According to OCBC's estimates, Singapore's latest CPI YoY is at 5.5% with lower bound at 0.84%, upper bound at 0.96% and midpoint at 0.90%.