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Economy in Brief

    Rise in Singapore's Inflation Spotlights Rises in World Grain Prices 
by Louise Curley February 25, 2008

Inflation in Singapore rose more than expected to 6.61% in January of this year, 2.2 percentage points above the 4.41% in December. A big part of the rise was due to the government's increasing the valuation of public housing on which imputed rents are partly based. The housing component rose 11.03% in January after rising only 2.88% in December.

While the jump in housing cost in December was somewhat of an anomaly, the rise in food prices has become a regular feature in the cost of living ever since mid 2007. The first chart shows that, except for the spike in the housing component in January, the food component has been increasing in importance relative to the housing component since early 2007.

World grain prices rises have been pushing up the cost of food. The second chart shows the daily world prices of corn, soybeans and wheat for the past year. The continued rise in these prices in February suggests that further food inflation is in the works, not only for Singapore, but for most other countries.

INFLATION  (Y/Y %Chg in CPI) Jan 08 Dec 07  Nov 07  Oct 07  Sep 07 Jul 07  Jun 07 2007 2006
  Total                          6.61 4.41 422 3.63 2.76 2.96 2.56 2.10 0.96
  Food 5.84 5.50 5.22 4.27 2.75 3.30 2081 1.56 1.33
  Housing 11.03 2.88 2.88 2.30 0.39 1.06 9.67 0.45 2.67
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