Singapore’s inflation accelerated to an 18-month high in August as record economic growth in the first half of the year spurred demand for goods and services.

The consumer price index climbed 3.3% from a year earlier, Singapore’s Department of Statistics said in a statement today. That matched the 3.3% median estimate of 10 economists surveyed by Bloomberg News. Prices rose 0.5% from July, without adjusting for seasonal factors, the report showed.

 

Singapore’s economy expanded at a record 17.9% pace in the first six months of the year, as surging exports bolstered manufacturing and the opening of two casino-resorts boosted services. The government, which expects gross domestic product to grow 13% to 15% this year, has tightened lending rules to curb speculation after home prices surged 38% last quarter.

 

“Wages are rising due to the buoyant employment outlook as well as hikes in foreign worker levies,” Irvin Seah, an economist at DBS Group Holdings in Singapore, said before the report. “Domestic demand-pull inflationary pressure is at work and that could potentially have some impact on price levels.”

 

The central bank said in its annual report in July that “economic activity is likely to be sustained at high levels” for the rest of 2010, adding pressure on business costs and spurring inflation.

 

The Monetary Authority of Singapore uses the currency instead of interest rates to manage inflation, which it forecasts will average between 2.5% and 3.5% this year. The central bank tightened policy in April, saying it would shift the Singapore dollar to a stronger range to trade in and allow a gradual appreciation. It next reviews monetary policy in October.

 

The Singapore dollar has gained 5.7% against its U.S. counterpart this year.

 

Housing prices, the biggest component of the consumer price index, climbed 3.1% from a year earlier in August, and transport costs increased 9%. Food prices rose 1.7%, today’s report showed.