Singapore’s inflation hits 25-year high of 6.6%

Singapore’s annual inflation rate hit a 25-year high of 6.6 percent in January, according to Department of Statistics (DOS) data released on Monday.

The inflation rate, as indicated by the consumer price index (CPI), was the highest since the 7.5 percent hit in March 1982.

From a month earlier, consumer prices in January rose 1.5 percent on a seasonally adjusted basis, the DOS said.

The Ministry of Trade and Industry (MTI) issued a statement along with the DOS data, saying the year-on-year jump in inflation in January was due to one-off factors such as a housing value revision and that it was in line with the official inflation forecast of 4.5-5.5 percent for 2008.

The MTI said inflation would start to ease in the second half of the year. In December, the annual rate was 4.4 percent.

“The 6.6 percent year-on-year increase in the CPI in January 2008 was consistent with the official inflation forecast of 4.5 to 5.5 percent for 2008 as a whole,” the MTI said.

The DOS said the jump in inflation was due largely to an 11.1 percent spike in housing costs recorded after a revision to values of public housing.

Housing costs, which account for 21 percent of the consumer price index, have the third-largest weighting after food and transport/communication.

Food prices, which carry the largest weighting in the CPI, rose 5.8 percent in January from a year earlier.

Transport and communication costs rose 6.9 percent between January 2007 and January 2008, driven by soaring global fuel prices and higher taxi fares.

Higher petrol prices also contributed to a rise in transport costs for food. This, coupled with higher global food prices, means more expensive grocery bills.

However, one local supermarket chain has extended a discount scheme to help shoppers cope with rising costs. NTUC FairPrice has given customers 5 per cent off prices of 500 of its housebrand products since mid-December 2007.

The discounts, originally due to finish at the end of February, has now been extended until the end of April. The extension is costing FairPrice S$1 million and is part of the company’s “Stretch Your Dollar” programme.

In the heart of Singapore’s financial district, many were not surprised to hear the latest inflation figure. Many have already tightened their belts.

“I have a family, so I have to plan our expenses and cut out unnecessary spending and then maybe make some investment to cover the shortfall,” said a member of the public.

“Shop around a bit more, do a bit of homework (before buying anything). It’s a bit tedious, but at the end of the day it’s your pocket,” said another. – CNA/ac/ir

Source : Channel NewsAsia – 25 Feb 2008

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