Singapore's current inflation rate is the highest in three years. But there is no cause for alarm as the price increase here is among the lowest in the world.

Latest figures from the International Monetary Fund show that the nation's inflation is running lower than three of its Asean partners and its arch Asian export rival, South Korea and Taiwan.

Also, the rise in consumer prices is slower than the average of the industrialised nations.

For the first seven months of this year, the nation's consumer price index, according to government statistics, rose by 5.3 per cent which is higher than increases for the past three years.

IMF statistics show that the annual increase of Singapore's consumer prices for April is 5.1 per cent against 7.2 per cent for the Philippines, 9.1 per cent for Thailand, and 10.9 per cent for Indonesia. April figures for Malaysia are not available yet.

The inflation rates for Taiwan and South Korea are 8 per cent and 12.4 per cent respectively.

The consumer price rise for 14 industrialised nations averages 6.4 per cent, reports the IMF. These countries are the US, Canada, Japan, Britain, Switzerland, West Germany, Italy, Holland, Sweden, France, Austria, Belgium, Denmark and Norway.

Economists have predicted that Singapore's consumer prices will rise between 4¼ and 5¼ per cent for the whole of this year. Last year, the CPI increased by 3.2 per cent.

The main reasons for the hike in local consumer prices this year are increases in the cost of food, transport and miscellaneous items such as medical fees and cinema admission charges.

The barmy days of rock-bottom inflation rates in Singapore (consumer prices rose at annual rates of not more than 2 per cent in the 1960s and early 1970s) ended when prices soared to 22.9 per cent in 1973 and 22.3 per cent in 1974.

Without a doubt, the oil crisis triggered off spiralling inflation in the world economy. But its underlying causes stemmed from the lack of world financial discipline, resulting in deficit financing and easy credit creation, something which had been going on for two decades.