Wednesday, February 24, 2010

Inflation up 0.2% last month

THE deflation that Singapore experienced in the second half of last year has turned into inflation, but in a mild way.

Last month, the consumer price index - the main measure of inflation here - inched up 0.2 per cent year-on-year, the first increase in eight months.

Compared with the month before, the index went up 0.7 per cent, said the Department of Statistics (DOS) yesterday.

But these increases were smaller than what economists had expected. They also warned against drawing historical comparisons, in the light of recent changes to the way inflation is calculated.

The consumer price index was adjusted this year to use 2009 as its base year for price comparisons, rather than 2004. The index is rebased every five years.

The latest inflation figure is the first to use the new rebased index, which also gives more weight to housing costs.

In fact, housing costs were one of the biggest reasons why prices rose last month over December figures. The costs of transport, education and stationery, health care and food also rose, DOS said.

Barclays economist Leong Wai Ho said that although inflation has been lower than expected, it is likely to increase in the coming months because of higher food prices and electricity tariffs.

Source: Straits Times, 24 Feb 2010

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