Singapore’s October Consumer Price Index Up By .6 Percent
Consumer price index rises by 0.6 per cent in October 2009.
Highlights
- The consumer price index (CPI) in October 2009 rose by 0.6 per cent over September 2009 due mainly to higher costs of housing, food and “recreation others”. Excluding accommodation costs, the consumer price index moved up by 0.6 per cent.
- Compared with October 2008, the consumer price index in October 2009 was 0.8 per cent lower. Excluding accommodation costs, the consumer price index fell by 1.1 per cent.
- For the period January-October 2009, the consumer price index went up by 0.3 per cent compared with the same period in 2008. Excluding accommodation costs, the consumer price index dropped by 0.6 per cent during the same period.
Month-on-Month Changes
The consumer price index in October 2009 went up by 0.6 per cent over September 2009. This increase reflected mainly higher costs of housing, food and “recreation & others”. Housing cost increased by 1.9 per cent as a result of higher electricity tariffs and service & conservancy charges (S&CC) as rebates for S&CC were given in September 2009 but not in October 2009. Excluding accommodation costs, the consumer price index rose by 0.6 per cent. Food prices edged up by 0.2 per cent due primarily to dearer fruits, cooked food, fresh pork and vegetables. On account of higher cost of holiday travel and salary for foreign maids, the costs of “recreation & others” went up by 0.4 percent.
On a seasonally adjusted basis, the consumer price index in October 2009 was 0.3 per cent higher compared with September 2009. Excluding accommodation costs, the consumer price index rose by 0.3 per cent.
Year-on-Year Changes
Compared with October 2008, the consumer price index in October 2009 fell by 0.8 per cent owing to lower costs of housing and “recreation & others”. Housing costdeclined by 4.7 per cent following lower electricity and gas tariffs as well as cheaper liquefied petroleum gas (LPG). Excluding accommodation costs, the consumer price index was 1.1 per cent lower in October 2009 compared with that a year ago. Costs of “recreation others” dropped by 1.9 per cent, resulting from lower holiday travel cost.
The consumer price index for the first ten months of 2009 was 0.3 per cent higher compared with the same period of previous year. Excluding accommodation costs, the consumer price index fell by 0.6 per cent during the same period.
Concept and Definition
The consumer price index (CPI) is one of the most useful indicators of inflation. It measures the change in the prices of a fixed basket of goods and services commonly purchased by the majority of households. The types and specifications of goods and services in the CPI basket as well as their weightage are kept constant to ensure that any changes in the index reflect pure price changes.
The weights for the new CPI series are compiled based on the results of the Household Expenditure Survey (HES) conducted from October 2002 to September 2003 and further updated to 2004. In the computation of the index for each item, the averageprice during 2004 is taken to be 100 index points from which indices of subsequent periods are compared to measure price change. The CPI is compiled on a monthly basis. For longer periods, the index is derived by averaging the monthly indices. Similarly, the whole-year index is calculated by taking the simple average of the 12 months’ indices for the year.
Scope and Coverage
The expenditure records of some 5,400 households were used to derive the weighting pattern for the new CPI series for the general population. These index households constituted the middle 90 per cent of all households with two or more persons by expenditure distribution. The remaining 10 per cent of the households in the two extreme ends were excluded for this purpose as their consumption patterns differed significantly from the general households.
The 2004-based CPI basket covers a total of 5,170 brands and varieties. Measurement of Changes in the Consumer Price Index To calculate monthly change, the difference between the index of the month
and that of the preceding month expressed in percentage term is used. This measures the change in average prices between the two months and serves as a useful short-term indicator of price movement.
To measure the annual changes at one point of time, the index of the month is compared with that of the same month in the preceding year. Likewise, the annual inflation rate for any year is computed by comparing the average for the 12 monthly indices with that of the preceding year.
Consumer Price Index for “All Items Less Accommodation”
Accommodation costs include rental, owner-occupied accommodation, minor repairs maintenance. Reflecting the very high home ownership rate in Singapore, owner-occupied accommodation accounts for the largest share. Annual Value (AV) is used as the pricing indicator for owner-occupied accommodation, but as the majority of Singaporean households own their housing, there is no impact on the cash expenditure of households. Within minor repairs & maintenance, the rebates for service conservancy charges (SCC) which are given to households living in HDB flats in different periods of the year also result in some volatility in the monthly CPI. Hence, the series on ‘All Items less accommodation’ is compiled as an additional indicator for use by interested users.
Seasonally adjusted Consumer Price Index
The data series on CPI and its major components are seasonally adjusted using the X-12 procedure. Seasonal adjustment is the process of estimating and removing seasonal effects from a time series. Users interested in the underlying price trends could refer to the seasonally adjusted data series.
Topics: consumer price index, CPI, economic crisis, Economy, October, recession, Singapore
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