Rising prices won't hit Singaporeans hard, minister says

By Romesh Navaratnarajah: Singapore's inflation rate is tipped to stay at five percent over the next few months before slowing down in the second half of 2012 to reach between 3.5 and 4.5 percent this year, said Lim Hng Kiang, Minister for Trade and Industry.

Speaking in Parliament yesterday, he said that rising prices in the coming months will not hit consumers hard since car prices and rentals on owner-occupied properties are expected to be the two biggest contributors to the increase in the Consumer Price Index (CPI), which hit 5.2 percent in March.

"As the majority of resident households in Singapore own their homes, they do not actually incur rental expenditure," he said. "Likewise, the majority of resident households will not be directly affected by the rise in COE premiums as new car buyers make up a small proportion of all resident households."

Meanwhile, the Monetary Authority of Singapore (MAS) has further tightened its monetary policy to ease the external demand for Singapore exports and keep imported inflation in check.

"The approach we have adopted is a multi-pronged one, which also includes measures to ameliorate domestic supply-side constraints," said Mr Lim.

He added that the government will also cushion the impact of the rising cost of living with cash grants.

"Although these grants do not reduce the headline CPI inflation, they help to offset the higher cost of living experienced by households."

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