'We look at an inflation forecast of between 1 to 2 per cent this year, which is a little higher than our previous years, but definitely still reasonable, considering that this is more than 16 quarters of growth,' said Trade and Industry Minister Lim Hng Kiang. -- ST PHOTO: ASHLEIGH SIM
SINGAPORE'S inflation rate is expected to rise to between 1 and 2 per cent for the whole of 2007, compared to 0.5 to 1 per cent for the first half of the year.
But the expected rise, announced by Trade and Industry Minister Lim Hng Kiang in Parliament on Monday, is not a cause for alarm.
'We look at an inflation forecast of between 1 to 2 per cent this year, which is a little higher than our previous years, but definitely still reasonable, considering that this is more than 16 quarters of growth,' Mr Lim told MPs.
And with such robust growth over the past 16 quarters, Mr Lim said he was 'quite surprised our inflation numbers are as low as they are'.
While the recent increase in the Goods and Services Tax may have had an impact on the inflation rate, Mr Lim said that based on previous increases of GST, 'this is a short term impact, and over time, the impact will be mitigated'.
Despite strong growth, Mr Lim said Singapore has been operating on an overall low inflation environment. In the last three years, Singapore's Consumer Price Index (CPI) has only increased at an average annual rate of 1 per cent.
Overall unit labour cost has also declined at an annual average rate of 2.2 per cent.
Related Video Link - http://tinyurl.com/2zqpqlExpect a bigger pinch from higher costs of living- but no need to panic
As Singapore enjoys one of its best economic booms in decades, Government statisticians are also telling telling Singaporeans- expect to fork out a little more for goods and services.
Trade and Industry minister Lim Hng Kiang announced in Parliament today that the inflation rate is expected to rise to between 1 and 2 per cent this year- up from the 0.5 to 1 per cent range for the first half of 2007.
In recent quarters, Mr Lim said the MTI has seen increases in property prices and rentals, as well as wages.
Property prices
He said pro-active approaches have been taken to address immediate space constraints. For example, the Government has introduced more interim office space supply and HDB flats for rental.
Additional information on property prices and rents for both private and public homes, as well as for the residential and office sectors, have also been released by the National Development Ministry.
This is to help the public and businesses to make more informed choices on property purchases and rentals.
Another 42,000 private residential units, and 640,000 sqm of office space, to be completed by 2010, will add to the property supply.
Manpower
Mr Lim said the Ministry would be looking into ways for Singaporeans such as older workers and women to take advantage of the strong labour market, and rejoin the workforce.
Reskilling efforts will also continue to help Singaporeans obtain better paying jobs.
Despite increased costs, Mr Lim said Singapore has already outranked 53 other countries to become the second most competitive country in the world, according to the World Competitive Yearbook this year.
The United States was ranked first.
But Mr Lim said Singapore cannot afford to be complacent.
Going forward, he said : 'The Government will continue to keep a tight watch on business costs, and strengthen competitive advantage and value creation, for Singapore to remain on it's growth path.'
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