subpage banner

Parliamentary Replies

Government Measures To Contain Rising Costs And Help Lower Income Group

13 Aug 2012

Date: 13 August 2012

To ask the Deputy Prime Minister and Minister for Finance:

In view of the recent report of an increase in the consumer price index in June compared to May 2012, (a) what further steps will the Ministry take to contain the rising costs especially in the accommodation and transport sectors; and (b) what further steps will be taken to help the lower-income group, who may be hardest hit with the rising cost of food.

Reply by DPM and Finance Minister Tharman Shanmugaratnam:

On a year-on-year basis, Singapore’s CPI-All Items inflation rose to 5.3% in June 2012 from 5.0% in the previous month. This includes imputed rentals on owner-occupied accommodation (OOA), which is a statistical concept but has no cash impact on households. Excluding imputed rentals on owner-occupied homes, inflation was 4.4% in June 2012. We expect this to moderate towards the end of the year.

Food Inflation

Food inflation has in fact eased since the start of this year, from 3.0% in the first quarter to 2.4% in the second quarter. This was due to moderated cost increases for both prepared and non-prepared food[1]. The Department of Statistics does a comprehensive survey of prices of food items in the typical household’s basket. While some items like sea bass, watermelon and cheese have gone up significantly over the last year, others like chilled lean pork, carrots and hen eggs have stabilised or declined.

The Government nevertheless keeps a close eye on food price inflation. To keep the costs of prepared food affordable, the National Environment Agency (NEA) intends to adopt management models that can help keep costs low. For example, NTUC Foodfare, a social cooperative, was appointed to run the new Bukit Panjang Hawker Centre on a not-for-profit basis. In addition, NEA plans to add 10 more hawker centres to provide affordable options to more Singaporeans.

Further, the Retail Price Watch Group (RPWG), headed by Senior Minister of State Lee Yi Shyan, keeps a close watch on any excessive price increases of food and other daily necessities. For non-prepared food, the RPWG has worked with supermarkets, wholesalers, hawkers and food courts to promote the availability of cheaper alternatives. The RPWG’s supermarket members – NTUC FairPrice, Giant and Sheng Siong – have for various periods held constant the prices of their house-brand products to help consumers cope with rising costs.

Besides daily necessities, healthcare and education costs can be of much concern to the lower-income households. This is why we have substantial transfers to help them, including our subsidies for healthcare, child-care and education, all of which are tilted in favour of lower-income families.

The GST Voucher Scheme, which was introduced in this year’s Budget, will also benefit lower- income households significantly. For instance, a retiree household staying in a HDB 3-room flat will receive $960 on average each year from the GST Voucher Scheme.

Accommodation and Transport

The Government is committed to keeping public housing affordable. While house prices are not part of CPI inflation, they are of concern to young families especially those who do not yet own their homes. MND has taken significant steps to boost the supply of Build-to-Order (BTO) flats, and to increase supply of private residential property through the Government Land Sales programme. We have also implemented four rounds of property market cooling measures, and will continue to monitor the situation.

Where transport is concerned, the cost increases have been driven largely by the increase in COE prices. Public transport costs have in fact remained very stable over the last few years. As part of the planned slowdown of the vehicle growth rate, it was necessary to proceed with the reduction in new COE supply from August 2012. We recently refined the vehicle quota system and will continue to invest heavily in improving public transport, which is the most fundamental solution to keeping transport costs in check.

Monetary Policy

MAS has continued to implement a calibrated tightening of monetary policy through appreciation of the Singapore dollar, so as to help curb imported and demand-led inflation. MAS will review its monetary policy stance again in October.


The Government will continue to keep a close watch on inflation, and is prepared to introduce additional measures if necessary.

[1] Year-on-year inflation for prepared food: 3.1% in Q1 to 2.4% in Q2; for non-prepared: 3.0% in Q1 to 2.5% in Q2.