The 6.6 per cent year-on-year increase in Consumer Price Index (CPI) in January 2008 was consistent with the official inflation forecast of 4.5 to 5.5 percent for 2008 as a whole, according to Singapore’s Ministry of Trade and Industry (MTI).
The inflation was partly fuelled by costlier transport, healthcare, food and clothing. However, the MTI expressed that the higher year-on-year inflation rate was also due to several one-off factors. Therefore, the figure does not necessary reflect an increased cost of living of the same proportion.
The ministry listed two technical factors that affected the latest inflation rate. Firstly, there was an upward revision of the Annual Value of housing flats to reflect the buoyant property market conditions. This pushed up the consumer price index as housing makes up one-fifth of the basket of goods and services measured. Secondly, the inflation figure was much lower for January last year due to the timing of rebates for service and conservancy charges, which eased housing costs. This year, the rebates were given out earlier in December 2007 instead of January 2008.
Even after factoring for inflation, all income groups in Singapore saw a real income growth of at least 3 per cent last year, according to an earlier Channel NewsAsia report,
Steps are also being taken to help ease Singapore’s inflation, which is fuelled by rising oil prices worldwide. The government had said during its recent Budget presentation that it would adopt measures such as moderating imported inflation through its exchange rate policy and stepping up diversification of food sources so as to minimise spikes in the prices of foods in any particular country.