Prices in S’pore expected to remain elevated in 2024
The official data says inflation is on the way down, but bank officer M. Lee feels the numbers do not reflect her experience.
The mother of four has had to increase her children’s allowances over the past year, so they can have enough for school meals and so forth.
“The biggest expenditure for the family is food; it’s the only thing I do not scrimp on,” said Ms Lee, 40.
Still, eating out is now reserved for very special occasions, with more home-cooked meals the norm as she tries to keep within budget.
Ms Lee’s overall perception about the rise in prices seems spot on.
While inflation in Singapore has moderated over 2023, prices are still above pre-pandemic levels and expected to remain elevated in 2024, when the impact of a 7 per cent rise in public transport fares, a second round of goods and services tax (GST) hike and carbon tax adjustments kick in.
Headline inflation at 3.6 per cent is still well above the 2010 to 2019 average of 1.7 per cent, while core inflation, which excludes accommodation and private transport, is at 3.2 per cent compared with the 1.5 per cent average over the nine-year period.
Headline inflation reached 6.6 per cent while core inflation hit 5.5 per cent at their peak in January.
On the surface, the average price increases of the main components in the basket of goods making up the consumer price index appear rather well contained.
These averages range between 2 per cent or so for household durables and services, and just over 6 per cent for food, transport, recreation and culture in 2023.
Dive deeper, however, and there are 10 items that have, on average, seen double-digit price increases over the past 11 months. These include chilled poultry, eggs, seafood, flour and other non-fish seafood, which have remained at persistently high levels for the year, as have cigarettes.
Medical fees at general practitioner clinics and polyclinics were also elevated, although the price increases seemed more intense in the first half of 2023.
Meanwhile, hotels and other expenses, and charges to places of interest, saw sustained price rises in the latter half of 2023.
On the domestic front, the economic reopening brought with it a slew of price increases.
These included higher wages due to the tight labour market, climbing home prices as returning expatriates pushed up rents, and the unleashing of prices that had been frozen because of the pandemic.
Still, the economists are not overly concerned about inflation in 2024, crediting the central bank’s strong Singapore dollar policy as helping offset imported inflation. This should keep the incoming price increases manageable for most of the population.
Ultimately, however, the GST hike and the rise in consumer prices will affect individuals differently, depending on their income bracket.
The biggest jolt of price increases will hit older workers, retirees and low-wage earners hardest as their incomes tend to be static, while consumption makes up the bulk of their spending.
That is where government assistance comes in.
Measures from Budget 2023 and September’s Cost-of-Living Support Package aim to help Singaporeans, especially lower- to middle-income households, cope with high inflation and living costs.
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