24-08-2012, 09:59 AM
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The Straits Times
www.straitstimes.com
Published on Aug 24, 2012
Inflation down to 20-month low of 4%
Price rises for housing and cars ease amid sluggish economy
By Aaron Low Economics Correspondent
CONSUMER prices in Singapore last month rose at their slowest pace in 20 months, lifting hopes that inflation may have peaked and is on the way down.
The consumer price index (CPI) increased 4 per cent in July - the lowest figure since November 2010 - down sharply from its 5.3 per cent rise in June.
Inflation had been stubbornly hovering around the 5 per cent mark for about 18 months.
Price rises for cars and housing, two of the biggest contributors to inflation over the period, finally slowed last month.
Housing prices rose 6.4 per cent, the slowest rate in 14 months, while transport prices grew 5.7 per cent, down from 8.7 per cent in June, the Department of Statistics said yesterday.
Prices of everyday goods and services, which include education and recreation, also rose at a slower pace, said the Trade and Industry Ministry and the Monetary Authority of Singapore (MAS).
Core inflation, which excludes accommodation and private road transport, fell to 2.4 per cent last month from 2.7 per cent in June. Food price inflation held steady at 2.3 per cent last month, unchanged from June.
Economists said they were not surprised at the development, noting that the sluggish economy is taking the sting out of inflation.
OCBC economist Selena Ling said wages are unlikely to rise as quickly as they did over the past year, while business costs, such as rents, could ease off. "It's really a function of a slowing economy that these price pressures are finally weakening."
The MAS expects inflation for the whole year to come in at between 4 per cent and 4.5 per cent, while core inflation should be 2.5 per cent to 3 per cent.
A fall in certificate of entitlement (COE) prices in yesterday's bidding exercise is also likely to mean weaker inflation ahead, said analysts.
But while the CPI is expected to fall, economists warn that there may be some volatility ahead. They noted that COE prices could jump, with cutbacks in supply, and this could push inflation up again.
Bank of America Merrill Lynch economist Chua Hak Bin noted the cost of some items is likely to stay high and may even rise. Health-care costs, for instance, bucked the general trend of falling inflation and rose 5.1 per cent last month, from 4.6 per cent in June.
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The Straits Times
www.straitstimes.com
Published on Aug 24, 2012
Inflation down to 20-month low of 4%
Price rises for housing and cars ease amid sluggish economy
By Aaron Low Economics Correspondent
CONSUMER prices in Singapore last month rose at their slowest pace in 20 months, lifting hopes that inflation may have peaked and is on the way down.
The consumer price index (CPI) increased 4 per cent in July - the lowest figure since November 2010 - down sharply from its 5.3 per cent rise in June.
Inflation had been stubbornly hovering around the 5 per cent mark for about 18 months.
Price rises for cars and housing, two of the biggest contributors to inflation over the period, finally slowed last month.
Housing prices rose 6.4 per cent, the slowest rate in 14 months, while transport prices grew 5.7 per cent, down from 8.7 per cent in June, the Department of Statistics said yesterday.
Prices of everyday goods and services, which include education and recreation, also rose at a slower pace, said the Trade and Industry Ministry and the Monetary Authority of Singapore (MAS).
Core inflation, which excludes accommodation and private road transport, fell to 2.4 per cent last month from 2.7 per cent in June. Food price inflation held steady at 2.3 per cent last month, unchanged from June.
Economists said they were not surprised at the development, noting that the sluggish economy is taking the sting out of inflation.
OCBC economist Selena Ling said wages are unlikely to rise as quickly as they did over the past year, while business costs, such as rents, could ease off. "It's really a function of a slowing economy that these price pressures are finally weakening."
The MAS expects inflation for the whole year to come in at between 4 per cent and 4.5 per cent, while core inflation should be 2.5 per cent to 3 per cent.
A fall in certificate of entitlement (COE) prices in yesterday's bidding exercise is also likely to mean weaker inflation ahead, said analysts.
But while the CPI is expected to fall, economists warn that there may be some volatility ahead. They noted that COE prices could jump, with cutbacks in supply, and this could push inflation up again.
Bank of America Merrill Lynch economist Chua Hak Bin noted the cost of some items is likely to stay high and may even rise. Health-care costs, for instance, bucked the general trend of falling inflation and rose 5.1 per cent last month, from 4.6 per cent in June.
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