SINGAPORE: With prices rising on multiple fronts, the Government is striving to maintain wage growth and diversify food imports to lessen the impact of inflation, said Minister of State for Trade and Industry Low Yen Ling on Tuesday (Jan 11).
She was responding to questions from Members of Parliament Ang Wei Neng (PAP-West Coast) and Jessica Tan (PAP-East Coast) about what can be done to manage the impact on consumers.
Singapore’s core inflation rose to 1.6 per cent year-on-year in November, up from the 1.5 per cent recorded in October.
The headline consumer price index, or overall inflation, jumped to 3.8 per cent year-on-year in November – the highest in more than eight years – compared with 3.2 per cent in the previous month.
In the near term, Ms Low said Singapore is likely to continue to face external cost pressures.
This is due to global energy prices remaining elevated and bottlenecks in global transportation, as well as supply-demand mismatches in various commodities and goods markets which are likely to persist for a while, she said.
However, authorities expect these pressures to ease gradually over the course of the year.
“In particular, global oil prices should ease as production increases to catch up with demand,” she added.
On Singapore’s domestic labour, Ms Low said wage growth is likely to continue to improve as the demand for labour strengthens on the back of a continued pickup in economic activity.
The Government’s rollout of policies such as the expansion of the Progressive Wage Model to the retail sector would also support salaries for lower-wage Singaporeans.
At the same time, as the COVID-19 situation stabilises, Ms Low said consumer demand should improve.
“With these factors in mind, MAS core inflation is expected to increase in the first half of 2022, before easing in the latter part of the year. For the full year, MAS core inflation could average within the upper half of the official forecast range of 1 per cent to 2 per cent,” she said.
As for CPI-All Items inflation, Ms Low said it is projected to average 1.5 to 2.5 per cent in 2022, following the 2.3 per cent expected for 2021.
The Ministry of Trade and Industry and the Monetary Authority of Singapore will carefully monitor price trends over the next few months of the year closely, before revising the forecasts if necessary, she added.
MULTI-PRONGED STRATEGY TO LESSEN IMPACT OF INFLATION
While Singapore’s small and open economy constrains how much the country can shield itself from inflationary pressures, Ms Low said the Government has put in place a “multi-pronged” strategy to mitigate inflationary pressures.
This includes striving hard to keep the country’s economy competitive, in order to continue creating good jobs to bring sustainable wage growth for Singaporeans, she said.
While the economy contracted by 5.4 per cent in 2020 due to the pandemic, it rebounded by 7.2 per cent last year.
“The strong recovery has helped to ensure that resident workers enjoyed real wage growth in 2021, after accounting for inflation. Specifically, we note that in 2021, the real median income growth of full-time employed residents was actually positive, at 1.1 per cent,” she said.
For lower-income residents at the bottom 20th percentile, real income rose by a larger 4.6 per cent last year, she added.