(SINGAPORE) Inflation is now expected to be higher in 2010, as a result of increased Housing and Development Board property values.

The government has revised its consumer price index (CPI) inflation forecast to between 2.5 and 3.5 per cent, from a one to 2 per cent range previously.

This is to account for the Inland Revenue Authority of Singapore's recent revision of annual values of HDB properties, which factor into the CPI basket as imputed rents under the accommodation cost component.

The Monetary Authority of Singapore considers the revision a technical one. Its underlying inflation forecast, which excludes the cost of accommodation and private vehicles, remains unchanged at one to 2 per cent.

This 'core inflation', says Standard Chartered economist Alvin Liew, 'should remain non-threatening in the absence of domestic price pressures, even as one-off factors push up headline inflation'.

But some economists think other risks could push next year's inflation rate.

Barclays Capital's Leong Wai Ho believes 'the forecast adjustment may not have fully factored in the prospect of higher food prices', driven up by unfavourable weather conditions across Asia.

And even though the government's adjustment is technical, 'the potential impact on inflation expectations cannot be completely ignored,' says Citi economist Kit Wei Zheng. He thinks that wage inflation may also rise, should immigration be tightened.