Prices in Singapore are rising, but controlling them is going to be a challenge
Singapore’s inflation is on a 9-year high. Controlling it is going to be difficult.
Post-pandemic inflation has become a global phenomenon, with prices of goods rising in multiple countries across the world.
In Singapore, inflation has been reflected in higher utility bills and increased expenditure in supermarkets, making livelihoods costlier and savings smaller.
To understand why controlling this inflation is tricky, we have to acknowledge its causes.
Firstly, the huge fiscal stimulus committed by the government during the pandemic (approx. S$100 billion) increased the overall liquidity in the market. Suddenly, investors had too much money in their hands waiting for good investment avenues.
Due to its positioning as a regional asset management hub and with real estate being seen as a safe, reliable asset in the country, Singapore became a thriving centre for capital and investment inflows, resulting in a hike in average property prices.
Despite additional measures to make property ownership, such as higher additional buyer’s stamp duties on subsequent property after the first, property demand has not seen a significant decline in the country.
Furthermore, pandemic induced issues in the supply chain have led to closure of many factories and businesses, increasing the cost of production and forcing companies to charge higher prices to save their profit margins.
Shipping too has become costly due to a rise in freight rates stemming from port disruptions and lack of supply containers.
It appears difficult to manage the importing-related problem, as supply chain issues have been seen worldwide, and simply importing more is ineffective if multiple countries do the same.
It will be interesting to see what measures the government and other institutions take to solve these new issues. Until then, we may have to wait and see our bills rack up slowly.
Interested to learn more about this inflation? Check https://www.channelnewsasia.com/commentary/inflation-taxes-rising-costs-living-supply-chains-singapore-budget-2022-2492451