Spike in home prices push up April inflation to 5.4%

The housing sector accounted for 52% of the gain in last month’s CPI.

The Consumer Price Indices (CPI) rose 5.4% YoY in April, marking the second consecutive month of a pickup in inflation.

The actual figure is higher than the consensus forecast and March inflation rate of 5.2% YoY.

According to Kim Eng Research, the faster inflation rate was spurred primarily by the housing category, which accelerated to +11.1% YoY from 9.1% in March 2012.

Accommodation, which accounts for 3/4 of the “Housing” sub-index, jumped +12.7% YoY (Mar 2012: +9.8% YoY) due to higher rents.

The Transportation sector was the second-biggest contributor, as it accounted for 24% of the inflation rate in April.

Despite the high CPI, Kim Eng Research is maintaining its 2012 headline inflation rate forecast of 3.8%. on the back of the expected moderating impact to domestic inflationary pressures from the elevated downside risk to the global economy, which has also led to lower commodity prices, especially crude oil prices in recent weeks.

The MAS expects headline and core inflation rates to be at 3.5-4.5% and 2.5-3% respectively this year.