likely to be prolonged and thereby continue to impart an upward impulse to global food, energy, and commodity prices. this will in turn feed into global consumer price inflation in the months ahead. the inflation story in singapore is not too different from the global story. as in the major economies, inflation in singapore started edging up towards the end of last year on the back of a strong recovery in demand. the singapore economy grew by a robust 7. 6 % in 2021 and the labour market returned to full employment. core inflation edged up progressively over the course of last year, from 0. 2 % in q1 to 1. 7 % in q4, as spare capacity was absorbed. the growth momentum has slowed this year but the economy remains on track to come in within the lower half of the 3 - 5 % gdp growth forecast. in h1 2022, growth has continued and broadened across sectors, coming in at 4. 4 % on a year - on - year basis. the economy is currently 6 % above its pre - pandemic levels. the output gap is positive at 0. 6 % of potential gdp, meaning the economy is operating slightly above its underlying capacity. the external - oriented sectors such as manufacturing and financial services are facing some headwinds in light of weaker growth prospects in the global economy. but the domestic - oriented and travel - related sectors are performing strongly, benefitting from the easing of mobility and travel restrictions here and in the region. the labour market has tightened and wage growth is running ahead of productivity gains. the seasonally adjusted resident unemployment rate has declined to 3. 0 %, the lowest rate since end - 2018. yet, total employment is still 2. 5 % below the pre - pandemic level – mainly because singapore lost 15 % of its non - resident workforce since december 2019. job vacancies are at record high levels with broad based increases across sectors. the vacancy - to - unemployment ratio is at its highest level since 1998. resident wages have risen by an average 6. 2 % year - on - year over the past three quarters, running slightly ahead of real productivity growth of 5. 5 %. imported inflation reflecting supply disruptions caused by the russia - ukraine war has significantly added to price pressures. import prices facing singapore have surged by 27 % in may this year, compared to the same period last year. about 80 % of this was contributed by higher oil and food prices. this step - up in energy and food

policy to directly dampen inflation. singapore ’ s monetary policy is centred on managing the exchange rate of the singapore dollar. when inflationary pressures build up, mas allows the trade - weighted exchange rate to appreciate faster. a stronger exchange rate helps to directly reduce imported inflation as well as restrain export demand, providing relief to labour market pressures. mas has been proactive in tightening monetary policy in response to rising inflationary pressures, tightening policy four times in the last nine months. in october 2021, mas slightly increased the rate of appreciation of the trade - weighted exchange rate policy band as a pre - emptive move when core inflation picked up from 0. 7 % in q2 2021 to 1. 1 % in july - august 2021. mas was among the earlier central banks in the world to begin normalising monetary policy. in january 2022, mas added slightly to the rate of appreciation of the policy band in an off - cycle move to lean against gathering inflation momentum. this was before the outbreak of war between russia and ukraine. in april 2022, mas re - centred upwards the exchange rate policy band and further increased its rate of appreciation. this was in view of a fresh impulse to inflation arising from shocks to global commodity prices and supply chains in the wake of the russia - ukraine war. and last week, in another off - cycle move, mas again re - centred upwards the exchange rate policy band to lean against price pressures becoming more persistent. the appreciation of the exchange rate to - date has begun to restrain inflation. the trade - weighted exchange rate has appreciated by close to 4 % compared with the beginning of october last year, acting as a filter against rising import prices. domestic consumer prices have not risen by the same extent as that in the major advanced economies or global commodity prices. year - to - date, the us and eurozone have seen inflation rising to record highs of 8. 2 % and 6. 8 % respectively. singapore ’ s headline inflation has been 5. 0 % year - to - date. the effects of mas ’ four monetary policy tightening moves are still working their way through the economy and will continue to dampen inflation over the next 12 months. the appreciation of the exchange rate is estimated to dampen core inflation by 0. 9 % points in h2 2022. over 2022 - 23, the four tightening moves to - date is estimated to restrain core inflation by an average of 1. 2 % points each year. but monetary policy should be applied in a balanced