26-02-2013, 07:55 AM
The Straits Times
www.straitstimes.com
Published on Feb 26, 2013
January inflation slows to 3.6 per cent
Core inflation fell from 1.9% in Dec to 1.2% last month, DOS data shows
By Fiona Chan Senior Economics Correspondent
INFLATION eased by more than expected last month, thanks to slower increases in housing and food costs.
Overall consumer prices rose by 3.6 per cent in January from a year ago, down from December's 4.3 per cent rise, according to Department of Statistics (DOS) data yesterday.
While transport cost increases accelerated last month, price rises moderated for most other major goods and services.
This was partly due to the impact of Chinese New Year. The holiday fell in January last year and so produced a high base effect that dampened inflation numbers last month, especially for food.
But the rise in housing and energy costs also slowed, suggesting that "the dip in inflation goes beyond just base effects", said HSBC economist Leif Eskesen.
Prices of oil-related items fell by 1.4 per cent in January due to weaker global crude prices, the first decline in three years, said the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) in a related press release yesterday.
For home owners, inflation came in at only 2.9 per cent last month, down from 3.8 per cent in December.
This measure of inflation excludes imputed rentals, a non- cash estimate of the accommodation cost that home owners would expect to pay if they were tenants of their own homes.
Stripping out all accommodation and private road transport costs, which made up more than three-quarters of overall inflation last month, inflation was even lower. Core inflation fell from 1.9 per cent in December to 1.2 per cent in January, DOS data showed.
This is close to a three-year low and well below the historical average of 2 per cent in the last three years, noted Credit Suisse economist Michael Wan.
Although the inflation numbers last month were more benign than economists had expected - their overall inflation forecast for January was 4 per cent - they believe inflation will step up again soon.
Echoing the recent warning from the MAS of volatile inflation in the months ahead, economists expect the central bank to maintain its tight policy stance of an appreciating Singapore dollar.
"Lower inflation is definitely a relief, but we think it is still too early for the MAS to relax its vigilance," said Barclays economist Joey Chew.
Car certificate prices rose to an all-time high in January, which will lead to an inflation spike this month, said Ms Chew. She expects February inflation to come in above 4 per cent before falling again in March.
HSBC's Mr Eskesen added: "Inflation is expected to remain relatively sticky around current levels as labour markets remain tight, cars and house prices continue to trend up, and commodity prices eventually add to the mix."
Transport costs rose 8.5 per cent last month, up from 8.2 per cent in December, DOS data showed.
Housing inflation moderated to 4.4 per cent last month from 6.7 per cent in December. The rise in food costs also eased to 1 per cent in January, down from 1.5 per cent in December.
Meanwhile, services inflation fell to 1.9 per cent from 2.5 per cent in December, due to smaller increases in the costs of public road transport and medical treatment and lower holiday travel costs, said the MAS and MTI.
On a month-on-month basis, inflation inched up 0.2 per cent in January from December, decelerating from the previous month's 0.7 per cent rise.
fiochan@sph.com.sg
www.straitstimes.com
Published on Feb 26, 2013
January inflation slows to 3.6 per cent
Core inflation fell from 1.9% in Dec to 1.2% last month, DOS data shows
By Fiona Chan Senior Economics Correspondent
INFLATION eased by more than expected last month, thanks to slower increases in housing and food costs.
Overall consumer prices rose by 3.6 per cent in January from a year ago, down from December's 4.3 per cent rise, according to Department of Statistics (DOS) data yesterday.
While transport cost increases accelerated last month, price rises moderated for most other major goods and services.
This was partly due to the impact of Chinese New Year. The holiday fell in January last year and so produced a high base effect that dampened inflation numbers last month, especially for food.
But the rise in housing and energy costs also slowed, suggesting that "the dip in inflation goes beyond just base effects", said HSBC economist Leif Eskesen.
Prices of oil-related items fell by 1.4 per cent in January due to weaker global crude prices, the first decline in three years, said the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) in a related press release yesterday.
For home owners, inflation came in at only 2.9 per cent last month, down from 3.8 per cent in December.
This measure of inflation excludes imputed rentals, a non- cash estimate of the accommodation cost that home owners would expect to pay if they were tenants of their own homes.
Stripping out all accommodation and private road transport costs, which made up more than three-quarters of overall inflation last month, inflation was even lower. Core inflation fell from 1.9 per cent in December to 1.2 per cent in January, DOS data showed.
This is close to a three-year low and well below the historical average of 2 per cent in the last three years, noted Credit Suisse economist Michael Wan.
Although the inflation numbers last month were more benign than economists had expected - their overall inflation forecast for January was 4 per cent - they believe inflation will step up again soon.
Echoing the recent warning from the MAS of volatile inflation in the months ahead, economists expect the central bank to maintain its tight policy stance of an appreciating Singapore dollar.
"Lower inflation is definitely a relief, but we think it is still too early for the MAS to relax its vigilance," said Barclays economist Joey Chew.
Car certificate prices rose to an all-time high in January, which will lead to an inflation spike this month, said Ms Chew. She expects February inflation to come in above 4 per cent before falling again in March.
HSBC's Mr Eskesen added: "Inflation is expected to remain relatively sticky around current levels as labour markets remain tight, cars and house prices continue to trend up, and commodity prices eventually add to the mix."
Transport costs rose 8.5 per cent last month, up from 8.2 per cent in December, DOS data showed.
Housing inflation moderated to 4.4 per cent last month from 6.7 per cent in December. The rise in food costs also eased to 1 per cent in January, down from 1.5 per cent in December.
Meanwhile, services inflation fell to 1.9 per cent from 2.5 per cent in December, due to smaller increases in the costs of public road transport and medical treatment and lower holiday travel costs, said the MAS and MTI.
On a month-on-month basis, inflation inched up 0.2 per cent in January from December, decelerating from the previous month's 0.7 per cent rise.
fiochan@sph.com.sg