Singapore CPI inflation hits 6.6% in Jan 2008

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Tuesday February 26, 2008

Singapore CPI inflation hits 6.6% in Jan 2008 - a new 25-year record high

This article belongs to the Singapore inflation watch story arc.

channelnewsasia.com :

Singapore's annual inflation rate hit a 25-year high of 6.6% in January, according to Department of Statistics (DOS) data released on Monday [25 Feb 2008]. The inflation rate, as indicated by the consumer price index (CPI), was the highest since the 7.5% hit in March 1982. In December, the annual rate was 4.4%.

The Ministry of Trade and Industry (MTI) issued a statement along with the DOS data, saying the jump in inflation was due to one-off factors such as a housing value revision and that it was in line with the official inflation forecast of 4.5-5.5% for 2008. The MTI said inflation would start to ease in the second half of the year. The DOS said the jump in inflation was due largely to an 11.1% spike in housing costs recorded after a revision to values of public housing. Housing costs, which account for 21% of the consumer price index, have the third-largest weighting after food and transport/communication.

Singapore's rising inflation is in line with price increases worldwide driven by higher food and fuel costs. Oil prices last week touched an all-time high of above US$101 per barrel and were trading near US$100 on Monday. In Singapore, food prices, which carry the largest weighting in the index, rose 5.8% in January from a year earlier.

- Well I don't know about you, but I don't really buy the "inflation is going to ease" part. With commodities running into supply-side constraints (peak oil looming, global grain inventories down to 53 days), major central banks inflating their M3 money supply at double-digit rates, and the US being in an election year (with promises of goodies such as the $160 billion stimulus package and more coming down the line, which is highly inflationary), the one way that inflation is not going to totally run away in an exponential fashion is for housing prices to collapse and in my opinion that would generally hurt more than help.

I expect oil and gas prices, and precious metals such as gold and silver, and food prices of all kinds (wheat, sugar, corn, soybeans, meats and so on) to "run away to the upside" this year. I expect way over $1000 gold, way over $100 oil, way over $10 natural gas, and way over $10 wheat. All very nice, very round, and very big numbers, once you start adding them up. Inflation going to ease? Come on.

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