Average S’poreans won’t feel effects of high inflation: Tharman

The high inflation rate does not reflect the reality for average Singaporeans, said Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam.

Speaking at the May Day dinner on Sunday, Tharman said that, while the Consumer Price Index (CPI) rose by about 5.2 per cent in March in this year from the same month last year, “it does not mean that the average Singaporean will feel this high inflation”.

He explained that people who already own homes and are not buying new cars are not affected, because more than half of the inflation is due to higher cost of new car ownership and higher housing rents.

Tharman added that the increase in prices for daily necessities and essential services, such as food, clothing and education, has been “much more moderate”, at 3 per cent or lower.

Therefore, the inflation in actual household expenditures for most Singaporeans is lower than  5 per cent, he pointed out.

Nevertheless, he said the government is taking steps to tame inflation and is closely monitoring the situation, he said.

For example, the Monetary Authority of Singapore (MAS) has been gradually strengthening the value of the Singapore dollar to reduce the impact of imported inflation.

In addition, the government is providing some help for lower-income Singaporean households to cope with the rising cost of living, added Tharman, citing the recently introduced goods and services tax (GST) vouchers.

However, he said Singapore can expect more cost pressures as business wages rise amid the tight labour market.

“There will be pressure on consumer prices this year and the next few years,” he said.