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23 Nov 07
Singapore’s consumer price index in October rose 3.6 percent compared to a year ago as soaring fuel prices boosted the cost of transportation as well as housing, the Department of Statistics said Friday.
The rise was faster than the 2.7-3.0 percent annual increase forecast by economists polled by Thomson Financial.
Compared to September, CPI in October was up 1.3 percent. Economists had expected inflation to rise 0.30-0.60 percent in October compared to September.
The cost of transportation rose 4.3 percent in October compared to a year ago due to higher car prices, petrol and bus fares.
Higher electricity costs and rents also boosted overall housing costs, which went up at an annual rate of 2.3 percent in October.
The cost of recreation increased 4.7 percent in October from the year before, due mainly to the higher cost of holiday travel and cable television services.
Food prices rose 4.3 percent in October compared to the same month last year, while healthcare costs were up 6.2 percent. The cost of education edged up 1.8 percent in October compared to a year ago.
While the rise in October CPI was faster-than-expected led by higher food and housing costs, it is ‘more representative’ of the uptick in the housing boom in Singapore where rising rentals and home ownership have not really been reflected in previous numbers, said David Cohen, chief economist at Action Economics Asia.
The analyst said the government has also been warning of a bigger uptick in inflation, which reflects the one-off increase in the goods and services tax (GST) to 7 percent from 5 percent effective July.
While CPI growth is expected to trend higher for the rest of the year, it is likely to be balanced by the strength in the Singapore dollar, said Cohen.
The Monetary Authority of Singapore (MAS) has said it will maintain its current monetary policy of allowing the gradual and modest appreciation of the Singapore dollar nominal effective exchange rate with a slight tightening bias, which will be reviewed in April.
The MAS manages the local currency against a basket of trade-weighted currencies.
Analysts said the MAS is unlikely to review its policy before April.
‘Part of the higher inflation is also from the GST hike and there is nothing they can do about that. And with the imported prices, as long as global inflation does not explode, the Singapore approach will keep inflation reasonably contained,’ said Cohen.
‘Inflation is contained given the booming economy,’ he said.
But the October CPI, the highest in 16 years, should pressure the MAS into tightening its monetary policy in April.
‘The new data seems to bring us closer to the probability of that happening,’ said Kit Wei Zheng, senior economist at Citigroup.
The Singapore government expects inflation to accelerate to 3.5-4.5 percent in 2008 from an estimated 2.0 percent this year.
In the first ten months of this year, the CPI has averaged 1.6 per cent.
(1 US dollar = 1.44 Singapore dollars)
Singapore sees fastest office rent rise in world: CBRE
22 Nov 07
Singapore’s office rents lept 83 per cent in the past 12 months — the fastest rate in the world — as it shrugged off turmoil in global financial markets, commercial property consultancy CB Richard Ellis Research said.
The survey of office occupation costs in 171 cities worldwide showed that Singapore was followed by Russian capital Moscow, India’s financial capital Mumbai, the Philippines’ capital Manila and Norway’s capital Oslo.
“The recent uncertainty in global financial markets has had no discernible impact on Singapore demand for office space,” CB Richard Ellis Research (CBRE) said in its semi-annual Global Market Rents survey.
Office rents in Singapore rose to $102.37 per square foot, making it the 11th most expensive business centre in the world, up from the 24th position in August survey, CBRE said.
The survey showed London’s West End, Mumbai, the City of London and Moscow as the top four most expensive office markets in the world.
“With (Singapore) rents at record levels, there is increasing tenant resistance to rental hikes, and occupiers are more prepared to explore lower cost locations and consider relocating to business parks or high-tech space,” the survey said