Food prices in Singapore expected to rise in the coming months: Gan Kim Yong
SINGAPORE - Food is expected to become more expensive in Singapore in the coming months as the prices of energy and global food commodities increase amid a global shortage of supply and labour, said Minister for Trade and Industry Gan Kim Yong.
In a written reply to a parliamentary question on Wednesday (Nov 3), Mr Gan said that with energy prices expected to rise further, food suppliers may need to adjust prices to reflect the cost increases.
This comes even as domestic food prices have risen in the past six months, and as the prices of goods and services in general are expected to be pushed up by global inflationary pressures.
Singapore imports natural gas to generate electricity and also imports most of its food, so higher prices of these commodities globally will translate to higher prices domestically.
While Mr Gan focused on food prices, Minister of State for Trade and Industry Alvin Tan, in a separate reply to parliamentary questions about inflation, also acknowledged that prices of goods and services were likely to go up.
He said the Government recognises that this is a concern for Singaporean households, especially those in the lower-income brackets.
Outlining the Government’s plan to manage cost-of-living pressures, Mr Tan said it will continue to diversify food sources to keep prices competitive.
At the same time, lower-income households will get support with their daily expenses through the Budget 2020 Grocery Vouchers Scheme as well as other forms of aid like Comcare.
Mr Tan also outlined the Government’s multi-pronged approach to manage the cost pressures caused by supply constraints and a recovery in the global economy.
To keep prices from spiralling, he said, the Monetary Authority of Singapore (MAS) has tightened monetary policy by slightly steepening the slope of its policy band for the country’s trade-weighted exchange rate, allowing the Singapore dollar to strengthen and making imports cheaper.
Mr Tan said MAS’ move helps to mitigate imported inflation and temper domestic cost, to ensure price stability over the medium term.
The remarks by Mr Gan and Mr Tan come as the Consumer Price Index All Items – a measure of consumer price inflation – hit 2.5 per cent in the third quarter of this year, up from 2.3 per cent in the previous quarter.
MAS has projected overall inflation to average between 1.5 per cent and 2.5 per cent next year.
Mr Tan said the Government is also managing supply-side constraints, which were already present before Covid-19 hit but has been accentuated during the pandemic. The release of pent-up demand as economic activity picks up has further worsened the situation, he said.
He added that the Government manages constraints, such as the supply of industrial and commercial space, to help moderate business cost increases and reduce the knock-on impact on consumer prices.
He cited the rental relief disbursed to businesses during the pandemic to help them cope with rental costs, as well as the Wage Credit Scheme and Jobs Support Scheme, as helping with manpower costs.
Mr Tan said the Government was paying particular attention to Singaporeans from the lower-income households, and will continue to provide assistance through ComCare and the permanent GST Voucher scheme as well as one-off support measures.
Those from lower- to middle-income households who have lost their jobs or suffered pay cuts due to the economic impact of the pandemic can also apply for financial assistance, he added.
Despite the rise in inflation, Singapore’s economic recovery for the year remains on track and Gross Domestic Product is expected to grow up between 6 and 7 per cent for the full year, barring any global economic setbacks, said Mr Tan.
Singapore’s non-oil domestic exports have also increased 9.1 per cent year on year in the third quarter of this year.
It was thus important to keep markets open so that exports can act as a hedge against inbound price increases, he added.
Said Mr Tan: “The Government will continue to monitor inflation and cost of living pressures closely, and adjust its policies if necessary.”