| NEWS ARCHIVES |
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| August CPI down 0.3% on year |
| 23 Sep 2009 |
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By Irene Chan
Singapore's consumer prices fell for a fifth consecutive month in August.
But analysts expect the trend to be turning soon, and shoppers may see prices start creeping up again towards the end of the year.
Data from the Statistics department showed that consumer prices fell 0.3 percent from a year ago.
The decline was slightly smaller than analysts' expectations of a 0.4 percent drop.
But compared to July, CPI rose 0.4 percent mainly due to higher transport, education, clothing and housing costs.
This was the fourth sequential month that consumer prices rose on-month.
With commodity prices rising in recent months, analysts, such as Forecast economist Vishnu Varathan, believe supply side inflation will soon return in the months ahead.
"Commodity and food prices, these two components have actually shown signs that they were running ahead of the global economic recovery. But given that underlying sentiment still tend to be a bit cautious, there could be some checks on the prices on the way up. The other wildcard that we really keep our eyes on is food prices, I think in countries like India, we already see deficient rain causing some pressure on food prices."
And Mr Varathan believes this could potentially be a growing concern for central banks if inflationary pressures accelerate at a time when the economy is still in an early stage of recovery.
But at the moment, economists think it's unlikely that there will be a sharp rise in inflation as what was seen last year.
Director of Asian Economic Forecasting at Action Economics, David Cohen,
"The fact is there's still a considerable amount of excess capacity in the global economy that should keep overall inflation relatively moderate. I think the inflation picture remains benign enough that the central bank will not be overly concerned in their semi-annual review of their policy for the exchange rate in October."
Analysts expect inflation this year to come in within the official forecast of between minus 0.5 and plus 0.5 percent.
For the first eight months of this year, consumer prices rose half a percent compared to a year earlier. |