Analysis of Singapore's Inflation Rate

Pages: 6 (1313 words) Published: November 9, 2012

Bachelor of Commerce (Bridging)

Intake 17

Elements of Economics



CPI inflation4

MAS inflation5

Private road transport5





Inflation here up 5.5% in December


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.


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,...

References: Michael Parkin, 2009. Economics. 10th edition. Pearson Addison Wesley
Department of Statistic Singapore (2012, January 25). Singapore Consumer Price Index December 2011. Department of Statistic Singapore. Retrieved from [Accessed 6 February 2012]
Matthew Bishop (2004, April). Economics A-Z. The Economist. Retrieved from [Accessed 6 February 2012]
Monetary Authority of Singapore (2011, December 8). Recent Economic Developments in Singapore. Monetary Authority of Singapore. Retrieved from [Accessed 7 February 2012]
Tony Ng (2011, October 19). COE premiums hit record hit. AsiaOne Motoring. Retrieved from [Accessed 8 February 2012]
Prime Minister Lee Hsien Loong (2011, August 14). National Day Rally 2011. Prime Minister’s Office, Singapore. Retrieved from [Accessed 8 February 2012]
Property Wire (2011, October 10). PropertyWire, Asia. Shortage or resale flats driving up prices in Singapore. Retrieved from [Accessed 8 February 2012]
Irena Asmundson (2010, June). Finance and Development. Back to Basic: Supply and Demand. Retieved from [Accessed 9 February 2012]
Housing and Development Board (2011). Key Statistic. HDB info Web. Retrieved from [Accessed 9 February 2012]
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