"Singapore experiences deflation for first time in 5 years - CNA 23 December 2014
SINGAPORE: For the first time in five years, Singapore is experiencing deflation as the consumer price index (CPI) went into negative territory, the first negative reading since December 2009.
The CPI fell to -0.3 per cent year-on-year in November, down from 0.1 per cent in October, said the Department of Statistics on Tuesday (Dec 23).
Private road transport cost decreased by 7.0 per cent, after the 5.6 per cent decline in October, largely due to the high base of car prices a year ago. Petrol pump prices also fell at a faster pace of 4.3 per cent compared to a decline of 1.6 per cent in October, the Ministry of Trade and Industry (MTI) and Monetary Authority of Singapore (MAS) said in a joint news release.
Pump prices eased by 4.3 per cent, and together with falling car prices, they led to a 7 per cent decline in private road transport costs.
Accommodation cost fell 1.2 per cent, extending the 1.0 per cent correction in the previous month - a result of the soft housing rental market.
Food inflation rose to 2.9 per cent from 2.8 per cent in October, mainly due to price increases for non-cooked food items and prepared meals.
Services inflation moderated to 1.4 per cent from 1.7 per cent in the preceding month, as holiday travel cost fell and a smaller increase in household services cost and medical treatment fees.
Core inflation – which excludes changes in the price of private road transport and accommodation – fell to 1.5 per cent year-on-year in November, down from 1.7 per cent the previous month. This was largely due to the smaller increase in services fees.
Consequently, core inflation is likely to stay firm and is expected to average 2 to 2.5 per cent this year and 2 to 3 per cent next year, while CPI-All Items inflation is expected to come in at 1 to 1.5 per cent this year and 0.5 to 1.5 per cent in 2015.
Should deflation persist, it can hurt the economic outlook. United Overseas Bank economist Francis Tan said: "One of the common-talked about potential negative impact of deflation or a deflationary spiral is that if consumers think that prices of one item is going to be cheaper or lower tomorrow, you will not want to spend today.
However, economists said the chances of Singapore falling into a deflationary spiral are slim. Head of Treasury Research and Strategy at OCBC Bank Selena Ling said: “If you look back at 2009, that was on the back of the great financial crisis and even then, Singapore only saw six months of negative CPI prints.
The increase in wage cost could be passed to consumers in the form of more expensive food and services. Economists said as a result, core inflation, which strips out accommodation and private transportation costs may see an uptick next year."
LOL!! Seriously! I sometimes think that economists have their heads in the sands. Or maybe we are NOT measuring the RIGHT THINGS?
Lessons for me are:
1. inflation or deflation is always a myth to me. Maybe I am NOT schooled enough as my measure of inflation or deflation is much simple. How much do I pay for a bowl of mee pok this time vs. the last time!;
2. for most citizens who do not dream, nor dare to dream for some, of owing a car or a private condominium, inclusion of these items in whatever indexes the authorities are measuring are SIMPLE IRRELEVANT! The laws of 'average' and 'big numbers' will ALWAYS obscured the true appreciation of what really matter to the majority of Singaporeans - the 60-70%! We need to help them see things in their perspectives!;
3. for the 'wait-and-see' theorists as in a deflation, the expectations are that the prices of 'things' will come down and so consumers will DELAY consumption. Well, I guess one can delay buying that Gucci bag or dress or watch or underwear but can one delay buying the daily essentials like rice, sugar, salt, vegetables and cooking oil that meet the basic survival needs? Probably NOT. Right? For these people, the published 'headline numbers' for inflation or deflation is really a joke! Maybe some said they don't know and they don't care as they have no time to care since they have to scurry around to make a real living!
Enjoy the DEFLATION and worry about how it will NEGATIVELY impact consumption and hence our GDP growth since EVERYONE, ok, I exaggerated, MOST will HOLD their consumption expecting the prices to drop further!
SINGAPORE: For the first time in five years, Singapore is experiencing deflation as the consumer price index (CPI) went into negative territory, the first negative reading since December 2009.
The CPI fell to -0.3 per cent year-on-year in November, down from 0.1 per cent in October, said the Department of Statistics on Tuesday (Dec 23).
Private road transport cost decreased by 7.0 per cent, after the 5.6 per cent decline in October, largely due to the high base of car prices a year ago. Petrol pump prices also fell at a faster pace of 4.3 per cent compared to a decline of 1.6 per cent in October, the Ministry of Trade and Industry (MTI) and Monetary Authority of Singapore (MAS) said in a joint news release.
Pump prices eased by 4.3 per cent, and together with falling car prices, they led to a 7 per cent decline in private road transport costs.
Accommodation cost fell 1.2 per cent, extending the 1.0 per cent correction in the previous month - a result of the soft housing rental market.
Food inflation rose to 2.9 per cent from 2.8 per cent in October, mainly due to price increases for non-cooked food items and prepared meals.
Services inflation moderated to 1.4 per cent from 1.7 per cent in the preceding month, as holiday travel cost fell and a smaller increase in household services cost and medical treatment fees.
Core inflation – which excludes changes in the price of private road transport and accommodation – fell to 1.5 per cent year-on-year in November, down from 1.7 per cent the previous month. This was largely due to the smaller increase in services fees.
Consequently, core inflation is likely to stay firm and is expected to average 2 to 2.5 per cent this year and 2 to 3 per cent next year, while CPI-All Items inflation is expected to come in at 1 to 1.5 per cent this year and 0.5 to 1.5 per cent in 2015.
Should deflation persist, it can hurt the economic outlook. United Overseas Bank economist Francis Tan said: "One of the common-talked about potential negative impact of deflation or a deflationary spiral is that if consumers think that prices of one item is going to be cheaper or lower tomorrow, you will not want to spend today.
However, economists said the chances of Singapore falling into a deflationary spiral are slim. Head of Treasury Research and Strategy at OCBC Bank Selena Ling said: “If you look back at 2009, that was on the back of the great financial crisis and even then, Singapore only saw six months of negative CPI prints.
The increase in wage cost could be passed to consumers in the form of more expensive food and services. Economists said as a result, core inflation, which strips out accommodation and private transportation costs may see an uptick next year."
LOL!! Seriously! I sometimes think that economists have their heads in the sands. Or maybe we are NOT measuring the RIGHT THINGS?
Lessons for me are:
1. inflation or deflation is always a myth to me. Maybe I am NOT schooled enough as my measure of inflation or deflation is much simple. How much do I pay for a bowl of mee pok this time vs. the last time!;
2. for most citizens who do not dream, nor dare to dream for some, of owing a car or a private condominium, inclusion of these items in whatever indexes the authorities are measuring are SIMPLE IRRELEVANT! The laws of 'average' and 'big numbers' will ALWAYS obscured the true appreciation of what really matter to the majority of Singaporeans - the 60-70%! We need to help them see things in their perspectives!;
3. for the 'wait-and-see' theorists as in a deflation, the expectations are that the prices of 'things' will come down and so consumers will DELAY consumption. Well, I guess one can delay buying that Gucci bag or dress or watch or underwear but can one delay buying the daily essentials like rice, sugar, salt, vegetables and cooking oil that meet the basic survival needs? Probably NOT. Right? For these people, the published 'headline numbers' for inflation or deflation is really a joke! Maybe some said they don't know and they don't care as they have no time to care since they have to scurry around to make a real living!
Enjoy the DEFLATION and worry about how it will NEGATIVELY impact consumption and hence our GDP growth since EVERYONE, ok, I exaggerated, MOST will HOLD their consumption expecting the prices to drop further!
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