Food costs to shoot up on back of weak SGD

Food costs to shoot up on back of weak SGD
Expect an uptick in the December CPI.

Expect an uptick in the December CPI.

Food costs will rise thanks to the SGD's current weakness, a report by DBS stated today.

According to DBS, December headline inflation is expected to register at 0.0%, up from the deflationary figure recorded in November.

The incrementally stronger headline figure will be supported by high food prices and increased import costs, as well as the removal of the base effect brought about by some policy changes.

"A weaker currency implies dearer imports while food prices, particularly for items imported from Malaysia likely have crept up due to the flood that hit the neighbouring state during the December monsoon period," stated DBS.

Here's more from DBS:
That said, the rise in inflation will be extremely gradual. Growth remains below potential. Energy prices remain depressed while rentals will continue to slide on cooling property market.

Throw in higher COE quota into the miz nd it's not hard to imagine the upside resistance to inflation. Full year inflation for 2015 is expected to acerage 1.7%, from 1.1% in 2014.