SINGAPORE: Gold prices have moved up by almost 30 per cent from this time last year, and Singapore’s Consumer Price Index rose at its fastest pace since January 2009 in November as inflationary pressures picked up.
Experts in Singapore say the rise in prices is driven largely by the continued increase in commodities.
IPAC Financial Planning vice president Brian Tan said the increasing prices are driven by two areas. “(One) would be the cost of the gold rings, that went up by about 30 per cent in US dollar terms, (and) also agricultural products, that would be 233 per cent,” he said.
“So clearly, what we are seeing here is a case of cost-push inflation whereby the inflation comes from the increasing price in raw materials and that results in an increasing price for everything.”
A recent report by Rabobank has noted that global dairy commodity prices have shifted to a higher average trading range.
According to Rabobank, in late 2010, dairy prices sat between 20 and 30 per cent above pre-boom levels in 2006.
But the salary of those maids a milking remained flat. Mr Tan said there had been no significant price increases in the service industry.
“So for (the everyday) working people, what they are seeing, is a great increase in price of goods that they need to buy, but (they) are not earning much more than last year.”
With global commodity prices expected to continue rising, experts say the upturn for precious metals such as gold remains intact.
Phillip Futures investment analyst Ong Yi Ling said: “I think there are compelling reasons why gold prices may continue to hit higher.
“(One of them is) the sovereign debt crisis in Europe, (which) is ongoing. We are seeing (signs) that Spain and even France may be (getting) into (a) debt crisis”.
Ms Ong added that in the US, economic recovery remains weak in areas such as the labour and housing sectors.
What is the outlook in Singapore for 2011? While we are recovering well and even had pretty sound growth in 2011 and with the projection of further growth in 2011, we may also need to look at the current rising cost in many of our day-to-day commodities.
Our dollar remains strong but the value may not be at par if prices continues to go up. In the long run, does keeping your money in the bank still viable? Or should we start to increase our financial intelligence and invest our money in some good hard assets? Do share your views so we can all learn together and achieve financial freedom. Awesome!