UPDATE 1-Singapore inflation hits 16-yr high on food, energy

(Adds detail, economist comments, background)

SINGAPORE, Nov 23 (Reuters) - Singapore's October inflation
leapt 3.6 percent from a year ago to a 16-year high, reflecting
higher costs for food and transport, data showed on Friday,
putting pressure on the central bank to curb rising prices.

The unexpectedly high figure came just days after the
government raised its inflation forecast for next year to
3.5-4.5 percent, with a peak at around 5 percent at the start
of 2008.

In a note to clients headlined "Shock, horror", HSBC
economist Robert Prior-Wandesforde said that prices were being
pulled up by an almost perfect storm of rising prices for
energy, food and commodities.

"The suggestion was that inflation would peak at around 5
percent in the first half of next year, which, if correct,
would be the highest since April 1982. In some ways this simply
illustrates how well Singapore has done in controlling
inflation," he said.

"But by its own high standards, such an outturn would
clearly count as a major shock in Singapore," he said.

The October consumer price index, or CPI, rose a seasonally
adjusted 1.3 percent from September, its highest level since
July. The Department of Statistics said in a statement that
inflation averaged 1.6 percent in the first 10 months of 2007.

It also said that the figures partly reflected a 2
percentage point sales tax increase to 7 percent on July 1.

The central bank, which tightened monetary policy last
month, faces the task of balancing the strong rise in inflation
with the potentially devastating effects of any slump in the
United States next year.

Earlier this week, the Monetary Authority of Singapore said
its policy of a modest and gradual rise in the Singapore dollar
SGD= was appropriate given the growth and inflation outlook
and that it did not expect to change it in the foreseeable
future.

"Nevertheless, we suspect that the MAS will find it hard
to avoid a further tweaking of its currency stance at the next
meeting in April if inflation is indeed running at or close to
5 percent," Prior-Wandesforde said, adding that even if prices
eased in the second half of 2008, wage growth could trigger
second-round effects on underlying inflation.

A sub-index for food, which at 23 percent has the largest
weighting in the overall index, rose 4.3 percent in October
from a year ago, while transport and communication, the
second-biggest component in the index, also climbed 4.3
percent.

The statement does not include seasonally adjusted figures
for the sub-indices.

Following is a breakdown of the data from the department.

October 2007

-------------------------
Percentage change against

Oct 06 Sept 07

Overall 3.6 1.3

Food 4.3 0.5

Clothing & Footwear ~ -0.5

Housing 2.3 2.7

Transport and Communication 4.3 2.3

Education and Stationery 1.8 0.1

Health Care 6.2 0.4

Recreation & Others 4.7 0.8
(Reporting by Jan Dahinten, editing by Neil Chatterjee)