December inflation estimated up 2.5-4.5 pct on higher food, transport costs

Thomson Financial
18 Jan 08

Singapore’s consumer price index (CPI) is expected to show a further rise in December after surging to a 25-year high in November, as prices of food and transport continued to climb.

Inflation data will be released by the Department of Statistics on Tuesday.

Economists polled by Thomson Financial expect that CPI for December will be up between 2.5 and 4.5 percent, after rising 4.2 percent in November.

Standard Chartered bank economist Alvin Liew predicted that December inflation will hit 4.3 percent, bringing the average 2007 inflation to 2.1 percent.

“The increase is again likely to be (driven by) higher food prices and transport costs,” Liew said.

The increase in food prices were exacerbated by floods in Malaysia, which led to shortages during the festive season, he said.

“The increase in pump prices by major petrol retailers and the 18-49 percent fare hike by major taxi operators in the middle of the month likely brought transport inflation higher,” said Citigroup economist Leon Hiew.

Citigroup forecasts the December CPI will be up 4.1 percent.

“We expect inflation to continue rising, possibly breaching the 6 percent mark in January,” Hiew said.

Besides the higher costs of food and transport, rising electricity tariffs and housing costs were also mentioned as possible causes of the expected rise in inflation during the month.

The following are the estimates provided by the economists polled, compared to year-earlier levels:

Action Economics – 2.5 percent
CIMB-GK – 4.5 percent
Citigroup – 4.1 percent
Standard Chartered Bank – 4.3 percent
(1 US dollar = 1.43 Singapore dollars)

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