Inflation woes to get worse

The impending rise of utility costs in Q2 and rising commodity prices mean the inflation battle is by no means over, OCBC said.

March CPI rose 5.0% yoy (+0.1% mom), boosted by higher costs of transport (+13.4% yoy due to dearer cars and petrol), housing (+7.1% yoy due to higher accommodation costs and electricity tariffs) and food (+2.6% yoy due to dearer prepared meals, vegetables, seafood etc).

Excluding accommodation costs, March CPI rose 4.2% yoy but was unchanged on-month.

For Q1 2011, CPI rose 5.2% yoy (+4.7% yoy if accommodation is excluded).

MAS’ core inflation measure, which excludes accommodation and private road transport, moderated to 1.8% yoy (+0.1% mom).

“Notwithstanding MAS’ re-centering of the SGD NEER in mid-April, the inflation battle is by no means over – commodity prices, especially crude oil, continue to stay elevated,” OCBC said in a statement.

The bank said utility costs are likely to climb again in Q2 given electricity tariff hikes of 6.5% due to higher oil costs.

OCBC’s 2011 CPI forecast remain at 4.1% yoy, higher than the official 3-4% forecast.