princess_morbucks
24-12-13, 08:56
http://www.todayonline.com/business/inflation-picks-pace-november
SINGAPORE — Inflation picked up pace last month, hit by the absence of rebates to Housing and Development Board households and higher Certificate of Entitlement (COE) premiums, but economists said the rise was expected and would not affect forecasts for price rises this year and next year.
The Consumer Price Index (CPI) for all items increased 2.6 per cent on-year last month, up from the 2 per cent seen in the previous month, the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) said yesterday.
The reading was slightly higher than the 2.5 per cent rise forecast by economists in a Reuters poll.
UOB economist Francis Tan said: “The main driver for inflation was higher accommodation costs compared to October, when there was disbursement of the Service and Conservancy Charges rebates that helped to lower overall housing costs. Additionally, higher COE premiums caused private road transport costs to edge higher.”
Accommodation costs rose 3.3 per cent on-year last month, up from the 1.9 per cent increase recorded in October, said the MAS-MTI joint statement. Private road transport costs, another major contributor to the rise in CPI, increased 3.4 per cent last month, accelerating from 2.7 per cent in October as higher COEs and a jump in petrol prices took their toll.
MAS Core Inflation, which excludes accommodation and private road transport costs, went up to 2.1 per cent last month, compared with 1.8 per cent in October.
CIMB economist Song Seng Wun noted that last month’s Core Inflation rose above 2 per cent for the first time in a year. “This is on the back of price gains in services, clothing, food and travel costs — all these things lifted the core inflation. To some extent, it’s also due to the low base from last year,” he added.
With the outlook for this month remaining broadly similar to last month’s, the analysts expect the full-year CPI and Core Inflation to come in within the official forecasts of 2.5 to 3 per cent and 1.5 to 2 per cent, respectively.
But they cautioned that the tight labour market continues to pose risks.
“COE premiums have started to stabilise somewhat and housing is also likely to be more stable, but we’ll continue to watch for the pass-through effect of higher wages, the result of foreign worker policies, as well as still-firm rentals in both commercial and residential property,” said Mr Song.
Wages are expected to go up next year as the qualifying salaries for employment passes and foreign worker levies will increase in January and July, respectively. “The impact of higher labour costs will be more prominent on the profit margins of companies in the service industries as they tend to have higher labour input content. This may eventually be passed on to higher services inflation,” said Mr Tan.
He also said the United States Federal Reserve’s decision to taper its stimulus may see the US dollar appreciating against its Singapore counterpart, leading to more expensive imports which may also be passed on to consumers.
SINGAPORE — Inflation picked up pace last month, hit by the absence of rebates to Housing and Development Board households and higher Certificate of Entitlement (COE) premiums, but economists said the rise was expected and would not affect forecasts for price rises this year and next year.
The Consumer Price Index (CPI) for all items increased 2.6 per cent on-year last month, up from the 2 per cent seen in the previous month, the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) said yesterday.
The reading was slightly higher than the 2.5 per cent rise forecast by economists in a Reuters poll.
UOB economist Francis Tan said: “The main driver for inflation was higher accommodation costs compared to October, when there was disbursement of the Service and Conservancy Charges rebates that helped to lower overall housing costs. Additionally, higher COE premiums caused private road transport costs to edge higher.”
Accommodation costs rose 3.3 per cent on-year last month, up from the 1.9 per cent increase recorded in October, said the MAS-MTI joint statement. Private road transport costs, another major contributor to the rise in CPI, increased 3.4 per cent last month, accelerating from 2.7 per cent in October as higher COEs and a jump in petrol prices took their toll.
MAS Core Inflation, which excludes accommodation and private road transport costs, went up to 2.1 per cent last month, compared with 1.8 per cent in October.
CIMB economist Song Seng Wun noted that last month’s Core Inflation rose above 2 per cent for the first time in a year. “This is on the back of price gains in services, clothing, food and travel costs — all these things lifted the core inflation. To some extent, it’s also due to the low base from last year,” he added.
With the outlook for this month remaining broadly similar to last month’s, the analysts expect the full-year CPI and Core Inflation to come in within the official forecasts of 2.5 to 3 per cent and 1.5 to 2 per cent, respectively.
But they cautioned that the tight labour market continues to pose risks.
“COE premiums have started to stabilise somewhat and housing is also likely to be more stable, but we’ll continue to watch for the pass-through effect of higher wages, the result of foreign worker policies, as well as still-firm rentals in both commercial and residential property,” said Mr Song.
Wages are expected to go up next year as the qualifying salaries for employment passes and foreign worker levies will increase in January and July, respectively. “The impact of higher labour costs will be more prominent on the profit margins of companies in the service industries as they tend to have higher labour input content. This may eventually be passed on to higher services inflation,” said Mr Tan.
He also said the United States Federal Reserve’s decision to taper its stimulus may see the US dollar appreciating against its Singapore counterpart, leading to more expensive imports which may also be passed on to consumers.