Singapore Predicts Inflation To Moderate In 2Q 2011
Singapore’s headline CPI inflation rose to 3.8% in November, from 3.5% in October.
The pickup in CPI inflation was mainly attributed to higher costs of non-tradables, namely accommodation and services, reflecting sustained consumer demand.
The increase in services costs also led the MAS underlying inflation measure, excluding the costs of accommodation and private road transport, to rise slightly from 2.0% in October to 2.2% in November.
CPI Inflation and M
Month-on-month (m-o-m) changes in Singapore’s CPI
On a month-on-month basis, the rate of increase in the CPI slowed from 0.5% in October to 0.3% in November.
The more modest rise in the CPI reflects largely the smaller increases in the costs of accommodation and private road transport, excluding petrol.
Notably, accommodation costs rebounded strongly in October after the disbursement of the S&CC and rental rebates for HDB flats in September.
Without the effect of the rebates, accommodation costs rose more moderately in November. On a three-month moving average basis, the CPI increased by 0.3%, the same pace as in October.
CPI Inflation in December 2010
Higher costs of accommodation and cars drove up CPI inflation in December.
CPI inflation rose further to 4.6% in December. The pickup in CPI inflation was mainly attributed to higher costs of accommodation and cars.
As such, the MAS underlying inflation measure, which excludes the costs of accommodation and private road transport, was 2.1% in December, similar to the 2.2% in the previous month.
Accommodation costs rose by 5.8% y-o-y in December 2010 as the current uptrend in residential property rents was exacerbated by the low base in December 2009 when a higher quantum of rental rebates were disbursed. Car prices also jumped by 27% y-o-y due to the surge in COE premiums in December.
For the whole of 2010, headline CPI inflation and the MAS underlying inflation measure averaged 2.8% and 1.5% respectively, in line with expectations.
Inflation Outlook
Headline CPI inflation is expected to be higher over the next few months before moderating.
CPI inflation will be higher over the next few months on account of stronger domestic and external sources of price increases.
Notably, the recent surge in COE premiums and global food prices will continue to impact headline inflation.
However, as anticipated, CPI inflation is expected to moderate more significantly in H2 2011.
In comparison, the MAS underlying inflation measure is likely to see only moderate increases in the next few months before also easing in the later half of the year.
Topics: 2010, 2Q, Asia, commercial rentals, commodity, consumers, domestic demand, economic growth, economic recovery, Economy, employment, GDP, global economic downturn, Governance, gross domestic product, household consumption, ICT, inflation, information technology, IT, jobs, liquidity, manufacturing, MAs, Ministry of Trade, Monetary Authority of Singapore, monetary policy, moniter, monitor, news, Pacific, recession, S$NEER, Singapore, technology, unemployment rate
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