News – Prices of consumer goods likely to increase gradually

Gradually? Is it means that, later when price went up 100%, “gradually”, it is not that bad as compare to sudden price spike? Both “gradual” or spike increase in price is STILL an inflation! Why do they still want to manage people perception towards things (inflation) that is inevitable when government print more money. Does a new and fancy bank note can hid the fact that they are actually printing more money (http://bit.ly/OnRRhj). More money = higher inflation, simple! When people get the new bank note, they will be “mesmerize” with the colorful monopoly paper and forget where the money actually come from.

 

CIMB Research expects higher price pressures to only come through next year, when the Government resumes its subsidy rationalisation plan (after general elections), albeit it is likely to reduce the subsidies in a gradual manner, and when the minimum wage policy comes into effect in Jan 2013.

“Therefore, we think inflation will pick up from an estimated 1.8% this year to 2.5%-3.0% next year,” said Lee.

In a wider scale of things, he said both headline and core inflation in most of Asia remained lukewarm, with the notable exceptions of India and Singapore.

“But the tame outlook may not last long as the El Nino dry spell effects or drought in major producing countries could disrupt production and supply. Meanwhile, higher commodity prices and rising food costs are stoking concerns that food inflation may rear its ugly head again,” he said.

He said with Asian economies battling slowing growth momentum, the return of food inflation could bite into consumer spending.

The research house expects inflation in most countries in Asia to show an upward bias in second half 2012 and 2013, driven by ebbing favourable base effects, festive demand and the anticipated bad weather-induced risks, such as higher commodity prices and rising food costs.

“That said, the inflation outlook should remain benign when compared to 2007-2008 levels,” he said.

 

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