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Singapore pegs CPI Inflation At 3.5 To 4.5 Percent This Year

Singapore’s Ministry of Trade and Industry (MTI) has pegged this year’s Consumer Price Index inflation between 3.5 to 4.5 percent considering previous CPI inflation values.

According to Second Minister for the MTI Mr. S Iswaran, CPI inflation reached 4.2 percent during the first two months of 2013, slightly lower than 2012’s 4.6 percent. This percentage, in turn, is considerably lower than 2011’s 5.2 percent.

The minister explained that last year’s inflation was fueled by accommodation costs and car prices, and that these two are expected to account for three-fifths of this year’s inflation.

“Nevertheless, housing rental growth has slowed more recently and if sustained, would lead to a slower pace of increase in accommodation costs,” Minister S Iswaran said.

Tighter car loan policies are also seen to moderate the claims of Certificate of Entitlement premiums. The ministry noted, however, that this aspect would need closer monitoring, as it remains volatile.

Costs of services will also be tightly watched, as the national economy’s drive towards increased productivity may lead to higher wage costs, which are expected to affect service costs along the way. The ministry identified the Wage Credit Scheme, however, as one of the government’s ways to cushion the impact of higher wage costs to service costs.

“In the longer term, with productivity gains, firms will be able to afford higher wage costs and cope with higher business costs, without having to pass on the increased costs to consumers,” Minister S. Iswaran explained.

Food prices, meanwhile, are seen to somehow stabilise this year if trends of the previous years are to be considered. Food price inflation went down to 2.1 percent in 2012 from 3.1 percent in 2011. During the first two months of 2013, the rate dipped further to 2.0 percent.

The ministry also said oil prices may continue to go down following the decline since the second half of 2012. Prices of oil-related items from January to February 2013 were lower by 0.8 percent year-on-year.