CPI set to hit high of 5% in first half of 2008, says Lim Hng KiangCPI set to hit high of 5% in first half of 2008, says Lim Hng Kiang
By Hoe Yeen Nie, Channel NewsAsia | Posted: 12 November 2007 2136 hrs
SINGAPORE: Minister for Trade and Industry Lim Hng Kiang told Parliament on Monday that the Consumer Price Index (CPI) is set to reach a high of five percent in the first half of next year, though prices are likely to ease afterwards.
He explained that prices have gone up because oil prices have doubled since the start of the year, and the one-off hike in Goods and Services Tax (GST) in July also contributed to the rising inflation.
But the CPI, which measures inflation at the consumer level, is expected to go down to three per cent in the second half of 2008, Mr Lim said.
Another factor driving inflation has been the disruptions in the supply of food items such as vegetables and diary products from Australia, Malaysia and Indonesia.
Mr Lim said: "Diversifying our food supply sources is one way we can reduce our vulnerability to such supply disruptions and maintain more stable food prices.
"AVA (Agri-Food & Veterinary Authority) will continue to step up efforts to this end. However, diversification cannot protect us against a worldwide increase in food prices, as is happening now."
When MP Halimah Yacob asked what the government has done to ease the inflationary impact on Singaporeans, Mr Lim pointed to measures such as the GST Offset Package, which is expected to cost the government S$4 billion over five years.
The government's exchange rate policies have also helped minimise the impact of inflation from other countries.
But Ang Mo Kio GRC Inderjit Singh asked: "Does the minister see any impact on our competitiveness here as far as businesses are concerned?"
Mr Lim replied: "We are tracking our competitiveness position very closely and so far we are in quite a good position for several reasons... even though (our inflation rate is) higher than what we've been experiencing, it's still lower than other countries...
"Second, even though wages have gone up last year and particularly the first three quarters of this year... (over) the last five, six or seven years (they did not go up) so rapidly."
Mr Lim added that the higher inflation should also be viewed against the backdrop of rapid economic growth rates since 2003, so it should not be surprising to see inflation rise above the "unusually low levels" seen over the last few years. - CNA/ac