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FEBRUARY 23, 2010, 2:43 A.M. ET
Singapore Prices Rose in January
By SAM HOLMES
SINGAPORE—Singapore prices rose for the first time in 10 months in January, albeit at a slower-than-expected pace, suggesting that reflationary pressures in the economy remain relatively weak and the case for monetary policy tightening is benign.
The consumer price index—a noncore measure of costs for goods and services—rose 0.2% in January from a year earlier, the Singapore Department of Statistics said Tuesday.
Singapore's economy has made a sharp recovery since falling into a deep contraction early last year as a result of the global economic crisis in late 2008 although consumer prices have largely remained in negative territory.
HSBC Senior Economist Robert Prior-Wandesforde said the data don't provide any immediate cause for a change in the Monetary Authority of Singapore's policy.
"I don't think there's anything to keep MAS officials awake at night in terms of reflationary pressures," Mr. Prior-Wandesforde said.
"It normally takes a good 12 to 18 months or even more before a strong pick up in demand feeds through to core inflation," he said.
The January reading is the first since the Department of Statistics rebased the index to 2009 prices, as is its practice every five years. Using the 2004 base, CPI was flat in December.
Pushing the index higher was a 7.1% rise in transport costs—following jumps in the prices of cars and petrol—and a 0.1% rise in food costs, which account for 22% of the index.
However, these rises were mitigated by a 2.4% drop in housing costs, a fall that in part reflects a change in the way such prices are measured—the department now uses monthly rental costs instead of annual property valuations.
But while current prices may be consistent with slightly expansionary policy settings, there may be a case for pre-emptive action at the central bank's April meeting.
"Changing policy should be a forward-looking procedure and so they have to judge whether this strong increase in growth will eventually translate into inflation," he said.
From a month earlier, the index rose 0.4% in seasonally adjusted terms, compared with a 0.3% fall in December and a 0.7% increase forecast in the poll.
FEBRUARY 23, 2010, 2:43 A.M. ET
Singapore Prices Rose in January
By SAM HOLMES
SINGAPORE—Singapore prices rose for the first time in 10 months in January, albeit at a slower-than-expected pace, suggesting that reflationary pressures in the economy remain relatively weak and the case for monetary policy tightening is benign.
The consumer price index—a noncore measure of costs for goods and services—rose 0.2% in January from a year earlier, the Singapore Department of Statistics said Tuesday.
Singapore's economy has made a sharp recovery since falling into a deep contraction early last year as a result of the global economic crisis in late 2008 although consumer prices have largely remained in negative territory.
HSBC Senior Economist Robert Prior-Wandesforde said the data don't provide any immediate cause for a change in the Monetary Authority of Singapore's policy.
"I don't think there's anything to keep MAS officials awake at night in terms of reflationary pressures," Mr. Prior-Wandesforde said.
"It normally takes a good 12 to 18 months or even more before a strong pick up in demand feeds through to core inflation," he said.
The January reading is the first since the Department of Statistics rebased the index to 2009 prices, as is its practice every five years. Using the 2004 base, CPI was flat in December.
Pushing the index higher was a 7.1% rise in transport costs—following jumps in the prices of cars and petrol—and a 0.1% rise in food costs, which account for 22% of the index.
However, these rises were mitigated by a 2.4% drop in housing costs, a fall that in part reflects a change in the way such prices are measured—the department now uses monthly rental costs instead of annual property valuations.
But while current prices may be consistent with slightly expansionary policy settings, there may be a case for pre-emptive action at the central bank's April meeting.
"Changing policy should be a forward-looking procedure and so they have to judge whether this strong increase in growth will eventually translate into inflation," he said.
From a month earlier, the index rose 0.4% in seasonally adjusted terms, compared with a 0.3% fall in December and a 0.7% increase forecast in the poll.
