Monday July 02, 2007

GST inflation : the second wave

I am bracing for a second wave of what I call "GST-inspired inflation". While GST has gone up just 2 points, actual street prices are going up more than that, 20%, 30% in some cases. What can I say, except :

"It's the money supply, stupid".

"GST" is just the official-sounding excuse. You really didn't think that the M3 money supply can go up by 23% and the effects would be limited to the stock market (STI breaking 3500, 3600 points) and property prices ($3400, $4000 per square foot, $5100 psf, etc), did you?

I'm just back from lunch, and I'm getting indigestion. Not from the food, but from trying to digest the fact that the price has gone up 20% for a plate of chicken rice at the western food stall. Last week it was $2.50. And this week it is $3.00. And the difference? 1 July 2007, the date of changeover from 5% GST to 7% GST. The trigger for the second wave.

And what was the first wave all about? I might call it the "pre-emptive strike". It's like this pent-up desire to pass on to the consumer all the costs that have been building up so far. Now that the floodgates have been opened, I await the next wave, and the next, and the next. And wondering how long it will take for the consumer to roll over and bring down half the economy with it. It will be interesting times, yes.

Rolling out the scoreboard again, here we go :

Orange juice : up 33%
Soya-bean: up 25%
Chicken rice: up 20%
Tea: up 14.3%
Coffee : up 14.3%
Milo: up 12.5%

Simon Tay's post has reminded me to also talk about these other recent price increases :

NETS transaction fees : up 227% to 329%
Starhub cable TV : up 150% (sports channels), up 20% (basic channels)

See also :

1. 23% : Singapore M3 money supply growth rate
2. Price inflation roars ahead
3. What else but more inflation

(2007-07-02 12:32:32 SGT) [Biz] Permalink

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