Sunday August 31, 2008

Singapore : Bread price inflation continues

This article belongs to the Singapore inflation watch story arc.

I went to buy the usual loaf of Gardenia high-fibre bread yesterday and found that the price had gone up by 10 cents, from $2.15 to $2.25. That's the one in the blue packaging. A quick check showed that the cheaper one in the red packaging, the enriched white bread variety, had also gone up 10 cents, from $1.75 to $1.85. After a few months of relatively stable bread prices in the midst of general commodity price volatility, it looks like bread price inflation has started to kick in again.

I have taken to collecting these plastic price tags of bread loaves in recent months, especially during the periods of price changes - and it has always been in the upward direction so far. Nothing quite like having hard evidence of price inflation in your hands. Here they are - the first 3 on the left are from 2007 :

At first glance, the timing of this increase seems a little peculiar, given how commodities have been volatile and generally declining in recent weeks, and how wheat itself had breached the $12 record back in Feb 2008 on the MGE exchange and yet there were no price increases in the local bread price so far. I rather suspect that we have hit the point where they have held down the inflationary pressures from the past half year or so as far as they could, and margins have declined to a point where they have no choice but to pass along the increased costs to consumers.

So. Despite some economists declaring the commodity boom over, and that inflation would ease in H2 2008, or 2009, I say, fat chance. I maintain that the ripple effects of $100+ oil are still continuing to ripple through the economy, and if you think we've had it bad so far, we haven't seen anything yet! $150 oil beckons, and then $180, $200, and beyond, and with it, the rest of the commodity complex. In terms of price inflation, the sky isn't really the limit this time round - we're heading to the next galaxy.

See also :

1. Bread and inflation
2. Wheat breaches $12 for first time after biggest gain since 2002
3. Singapore inflation rate hits new 26-year high of 7.5% in Apr 2008

(2008-08-31 11:05:42 SGT) [Biz] Permalink

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