Tuesday, February 23, 2010

New CPI Basket for 2010

From this year onwards, the 2009-based CPI basket will be used to calculate the CPI rate. There were some minor adjustments to the weightage pattern between the 2004-based and the 2009-based CPI basket.

Main Group2004-based2009-based
Clothing & Footwear43
Education & Stationary87
Health Care56
Recreation & Others1716

Two things of note are that they have included the one-person household in the calculation of the CPI and they are getting the monthly rental value from IRAS instead of using the Annual Value of the house.This would make the housing CPI changes more timely than previously.

Housing now occupies a much bigger percentage in the CPI basket. Translated, any changes to our homes' annual values or increase of utility bills will be quite apparent. I wonder if the changes to the property tax (announced in Budget 2010) is partially because of the changes in the CPI basket. By changing the property tax tier, the CPI will be lowered by quite a bit since 80% of Singaporeans are living in HDB flats. Transport & Communications seems to have also split up. Previously, it was always grouped together.

I guess only around the middle of the year will the impact of the changes to the inflation rate be more apparent.

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