Inflation

I have a shock today. It was reported in the Straits Times that our authority has raised the inflation forecast upwards due to unexpected higher housing and car prices. Don't get me wrong. I am not surprised by the revision in the inflation outlook at all. In fact, I have been talking about it since last year.

What really shocked me is that our authority should feel anything unexpected of this. Unless you live outside of Singapore all these while, there is no way that you will not notice the runaway COE prices. For the benefit of readers who are not living in Singapore, COE is a piece of paper called Certificate of Entitlement and you need one to drive a motor vehicle in this country. The total car price will include the cost of this piece of paper, import car price and other taxes. COE prices have increased from $18,502 in January 2010 to $56,002 in the latest July's bidding. Since prices have been rising ever since and the number of COE is fully controlled by the government, why are they so surprised about higher car prices? This is really puzzling.

In addition, property prices have been rising since two years back. In Singapore, private property prices have all along been supported by the public housing prices. Since public housing prices have been rising, the private property prices and rental prices will definitely go up in tandem. So, what is so unexpected of this?

Really unbelievable. In fact, I won't be surprised if CPI were to hit 6% soon.