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26-07-2011, 06:47 AM
Doesn't take a genius to figure out that inflation is going to rise sharply. Just look around at the prices of resale HDB and of COEs! 
Jul 26, 2011
June inflation hits 5.2%
Rise not far off January peak of 5.5%; transport, housing main drivers
By Magdalen Ng
NEW figures out yesterday confirmed a warning issued last week by the central bank: Inflation is on the rise again.
The consumer price index (CPI) for last month has come in at 5.2 per cent compared to June last year, close to January's peak levels of 5.5 per cent.
The upswing was flagged by the Monetary Authority of Singapore (MAS) last week.
MAS managing director Ravi Menon had said that inflation would be above 5per cent over the next few months, before easing towards the end of the year.
In issuing the latest CPI figures yesterday, the Department of Statistics said the main contributors to rising inflation were housing and transport costs.
They made up 25 per cent and 16 per cent respectively of the CPI basket that is used to track price changes.
Housing costs rose 8.8 per cent year-on-year, owing to pricier accommodation and electricity tariffs. Higher petrol and car prices also saw transport costs jump by 10.4 per cent.
Only the communications component saw a decrease - of 1.6 per cent - as Internet subscription fees fell.
Still, month-on-month, June prices fell 0.2 per cent lower from May, even though food prices were up 0.3 per cent.
Housing costs declined by 0.9 per cent month-on-month, mainly because rebates for service and conservancy charges were given last month, and not in May.
Bargains on offer at the Great Singapore Sale meant prices of clothing and footwear fell by 3 per cent.
HSBC's chief economist for India and Asean, Mr Leif Lybecker Eskesen, said the month-on-month drop was distorted by rebates and seasonal shopping discounts. 'However, annual inflation is holding firm and rising gradually.'
Bank Of America economist Chua Hak Bin and DBS economist Irvin Seah have also raised their full-year inflation forecasts for this year to 4.6 per cent, up from the previous 4.2 per cent.
This is in line with MAS' estimates, which were revised upwards last week to between 4 per cent and 5 per cent.
Core inflation, which excludes accommodation and transport costs, to give a better picture of out-of-pocket cash costs for consumers, rose 2.3 per cent last month over the same period last year.
CIMB regional economist Mr Song Seng Wun said that as long as the economy keeps generating employment and income, there will be a degree of inflation.
However, Mr Kelvin Tay, chief investment strategist for Singapore at UBS Wealth Management Research, thinks the current rise in inflation will need to be tackled with a mix of tools.
He said: 'A mixture of high inflation, negative real interest rates and a strong currency is the perfect recipe for an asset bubble to build.
'The higher prices are largely driven by property and COE prices. A strong Singdollar will mitigate neither. The MAS will increasingly have to consider the presence of other instruments such as regulation, which can directly affect leverage or risk-taking.'
songyuan@sph.com.sg
Jul 26, 2011
June inflation hits 5.2%
Rise not far off January peak of 5.5%; transport, housing main drivers
By Magdalen Ng
NEW figures out yesterday confirmed a warning issued last week by the central bank: Inflation is on the rise again.
The consumer price index (CPI) for last month has come in at 5.2 per cent compared to June last year, close to January's peak levels of 5.5 per cent.
The upswing was flagged by the Monetary Authority of Singapore (MAS) last week.
MAS managing director Ravi Menon had said that inflation would be above 5per cent over the next few months, before easing towards the end of the year.
In issuing the latest CPI figures yesterday, the Department of Statistics said the main contributors to rising inflation were housing and transport costs.
They made up 25 per cent and 16 per cent respectively of the CPI basket that is used to track price changes.
Housing costs rose 8.8 per cent year-on-year, owing to pricier accommodation and electricity tariffs. Higher petrol and car prices also saw transport costs jump by 10.4 per cent.
Only the communications component saw a decrease - of 1.6 per cent - as Internet subscription fees fell.
Still, month-on-month, June prices fell 0.2 per cent lower from May, even though food prices were up 0.3 per cent.
Housing costs declined by 0.9 per cent month-on-month, mainly because rebates for service and conservancy charges were given last month, and not in May.
Bargains on offer at the Great Singapore Sale meant prices of clothing and footwear fell by 3 per cent.
HSBC's chief economist for India and Asean, Mr Leif Lybecker Eskesen, said the month-on-month drop was distorted by rebates and seasonal shopping discounts. 'However, annual inflation is holding firm and rising gradually.'
Bank Of America economist Chua Hak Bin and DBS economist Irvin Seah have also raised their full-year inflation forecasts for this year to 4.6 per cent, up from the previous 4.2 per cent.
This is in line with MAS' estimates, which were revised upwards last week to between 4 per cent and 5 per cent.
Core inflation, which excludes accommodation and transport costs, to give a better picture of out-of-pocket cash costs for consumers, rose 2.3 per cent last month over the same period last year.
CIMB regional economist Mr Song Seng Wun said that as long as the economy keeps generating employment and income, there will be a degree of inflation.
However, Mr Kelvin Tay, chief investment strategist for Singapore at UBS Wealth Management Research, thinks the current rise in inflation will need to be tackled with a mix of tools.
He said: 'A mixture of high inflation, negative real interest rates and a strong currency is the perfect recipe for an asset bubble to build.
'The higher prices are largely driven by property and COE prices. A strong Singdollar will mitigate neither. The MAS will increasingly have to consider the presence of other instruments such as regulation, which can directly affect leverage or risk-taking.'
songyuan@sph.com.sg
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
