Singapore's May CPI up 4.5% on-year

[kazukirai]

Uh-oh~

Singapore's May CPI up 4.5% on-year
By Jonathan Peeris | Posted: 23 June 2011 1316 hrs

SINGAPORE: Singapore's consumer price index (CPI) increased by 4.5 per cent on-year in May, on account of higher costs of housing, transport and food - the same figure that was recorded in April.

According to data released Thursday by the Department of Statistics, excluding accommodation costs, the consumer price index rose by 3.3 per cent.

Analysts had expected a moderation in May's inflation to 4.1 per cent, as monetary tightening helped tame inflationary pressures and global commodity prices fell.

But this was not the case as the cost of transport rose 7.5 per cent in May, as a result of higher prices for cars and petrol.

Housing cost rose by 8.1 per cent, as a result of higher accommodation costs and electricity tariffs.

Food prices rose 2.8 per cent, largely due to more expensive prepared meals and ingredients.

The consumer price index in May went up by 0.6 per cent over April this year.

The higher cost of housing was partly offset by the lower costs of transport, "recreation & others" as well as clothing & footwear.

Housing cost increased largely due to higher service & conservancy charges as rebates for service & conservancy charges were given in April but not in May.

The MAS core inflation measure, which excludes the costs of accommodation and private road transport, rose 2.1 per cent on-year.

On-month, the MAS core inflation measure declined by a marginal 0.1 per cent.

- CNA/cc

[Musicwhiz]

Haha not entirely surprising. You look at the prices of houses and cars and you already have a good gauge of the CPI!

[Musicwhiz]

Business Times - 24 Jun 2011

May inflation rate at higher than expected 4.5%

Consumer price index driven up by higher cost of housing

By MICHELLE QUAH

DRIVEN mostly by rising housing costs, Singapore's inflation rate for May came in at 4.5 per cent - unchanged from April but higher than expected.

While the rise in the consumer price index (CPI) has eased markedly since January's 5.5 per cent two-year high, economists had forecast a further moderation in the May inflation rate to just above 4 per cent. Still, some analysts note that the rise in prices has stabilised.

Against the preceding April, the CPI was up 0.6 per cent, with prices of all items - except housing - flat or down.

The Department of Statistics (DOS), which publishes the index, yesterday said that the higher cost of housing in May was partly offset by the lower costs of transport, 'recreation & others' as well as clothing and footwear.

Housing costs had risen 3.1 per cent month-on-month, as rebates for service and conservancy charges were given in April but not in May. Against a year ago, housing costs surged 8.1 per cent last month, fuelled by higher accommodation costs and electricity tariffs.

Higher prices of cars and petrol contributed to a 7.5 per cent year-on-year jump in transport costs. Food prices rose 2.8 per cent, as a result of pricier prepared meals, seafood, meat and poultry, dairy products and vegetables.

Excluding accommodation costs, the CPI was 3.3 per cent higher year-on-year and 0.2 per cent lower month-on-month. Over the first five months of 2011, the CPI has risen 4.9 per cent, compared with the same period last year, DOS said. Excluding accommodation costs, the index has increased 4.3 per cent during the same period.

The core inflation measure tracked by the Monetary Authority of Singapore (MAS), which excludes the costs of accommodation and private road transport, declined by 0.1 per cent on a month-on-month basis in May and by 2.1 per cent year-on-year.

Said DBS Bank economist Irvin Seah of the CPI increase in May: 'While this is slightly higher than market expectations, the good thing is that it has remained stable amid the rising downside risks to growth. This should at least bring some sighs of relief for policymakers.'

He added: 'With inflation likely to ease and downside risks to growth still a concern, the probability of another round of tightening by the MAS has reduced significantly.'

Chow Penn Nee of UOB Economic-Treasury Research believes that headline inflation will likely moderate further in the months ahead, due to rebates on housing and utilities given by the government, as well as the impact from monetary policy tightening by the MAS. 'Together with the slowing global growth, that should see demand for commodities moderate and ease inflationary pressures somewhat,' she said.

Chua Hak Bin of Bank of America Merrill Lynch noted that while inflation is moderating, it is not happening as quickly as the MAS has forecast. 'We expect MAS to maintain the current 'slightly steeper' appreciation policy stance at the October meeting. However, we do not discount the odds of MAS normalising back to the default stance of a 'modest and gradual' appreciation, given slowing growth,' he said.

The economists, however, warned that wage pressures from a tight labour market and a stricter foreign worker policy are likely to continue to impact inflation. Citigroup economist Kit Wei Zheng reckoned that with the inflation rate having surprised on the upside in April and May, the full-year rate could well come in above the official forecast of 3-4 per cent, 'likely closer to 4.5 per cent'.