Inflation of Singapore

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Bachelor of Commerce (Bridging)

Intake 17

Elements of Economics

Contents

Introduction3

CPI inflation4

MAS inflation5

Private road transport5

Accommodation6

Recommendation7

Conclusion8

References9

Inflation here up 5.5% in December

Introduction

Last December, Singapore’s inflation, which is defined as a persistently rising price level, rose to 5.5 per cent on a year-on-year basis. The author states that CPI inflation is due to the accommodation and private road transport higher contribution. Furthermore, the author also mention the MAS core inflation increased to 2.6 per cent year-on-year due to the ongoing pass-through of earlier increasing costs. The report from December’s MAS’s Recent Economic Developments in Singapore further supports the author’s article. In this discussion, it could be argued that consumer demand for housing and transport are the major factors, which Department of Statistic Singapore reported, contribute to the increment in inflation. In addressing the challenge of the governments to meet the consumer demand, the paper will mention a few discussions and a recommendation about the issue on inflation of Singapore.

CPI and MAS Inflation

CPI inflation

CPI, or Consumer Price Index, measures the average of the prices paid by urban consumers for a “fixed” basket of consumer goods and service (Michael Parkin, 2011). In Singapore, the major contributing “fixed” baskets are Housing, Food and Transport. In total, these three factors are more than half of the entire CPI. Data extracted from the December 2011’s CPI report is using year 2009 as the base period, which is derived from a Household Expenditure Survey.

As Singapore inflation rates are published monthly, the Singapore Government is preventing bad or fictional speculations of future inflation.

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Source: Department of Statistic Singapore, 2012

Below table showing partial data of Singapore CPI December 2011

|FOOD |2,205 | |HOUSING |2,548 | |Accommodation |2,002 | |Fuel & utilities |357 | |Household durables |189 | |TRANSPORT |1,553 | |Private road transport |1,166 | |Public road transport |366 | |Other travel & transport |21 | |Source: Department of Statistic Singapore, 2012 |

MAS inflation

MAS’ core inflation is stated as a smaller amount than the CPI inflation in this article. This difference is due to MAS monitoring a core inflation measure that excludes components of “Accommodation” and “Private road transport”.

Private road transport

Data from Department of Statistic Singapore states that the overall inflation of transport increased 10% from last year’s December with a detailed 12.2% increment for the sub category “Private road transport”. Singapore Government controls the number of vehicles on the island via placing a quota on COE.

In mid October 2011,...
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