Inflation to ease in 2nd half of year
Higher-than-expected rate of 6.5% last month due to technical factors, says Tharman
BARRING oil and commodity price rises, inflation should ease further in the second half of this year, Finance Minister Tharman Shanmugaratnam said at a media briefing yesterday.
Inflation came in at 6.5 per cent last month, above expectations of 6.1 per cent, but below 26-year highs of 7.5 per cent in April, May and June.
Mr Tharman was speaking at an event organised by the Inland Revenue Authority of Singapore (Iras) to commemorate 60 years of work with a new public gallery and a book detailing its history.
He attributed last month’s stronger-than-expected numbers to technical factors: ‘The June numbers contained the service and conservancy charges rebate and that’s a one-off, so in July the numbers would move back up.’
He added that if owner-occupied housing were taken out of the headline inflation numbers, last month’s inflation rate would have come in at 5.4 per cent, down from an overall 6.5 per cent for the first half of the year.
Owner-occupied housing reflects the rental cost of housing in the consumer price index, and acts as a statistical device but does not reflect an increase in the cost of living as house owners do not pay cash to anyone else.
With exports suffering from the continued appreciation of the Singdollar, reducing their global competitiveness, Mr Tharman said: ‘We have to look at it from a medium-term perspective rather than the short term.
‘In the short term, you always find that there are strong cross-currency movements, which hit different companies differently. Our policy has to be geared towards the aggregate economy, and that’s why we have the trade-weighted policy.’
He said market observers tend to look only at the Singdollar-US dollar exchange rates, which see-saw regularly because both currencies are liquid, being favourite currencies for investors to use in different regions. They therefore fluctuate against other major currencies, but these fluctuations are not long-term.
When asked if goods and services tax (GST) rebates would be offered to local businesses to help stimulate consumer spending, he replied: ‘The very small businesses can always choose to opt out of the scheme. GST is more of a cost faced by consumers. It is a fact that the GST offset package more than offsets the cost of the GST increase for the vast majority of Singaporeans.’
He added that with last year’s surplus, the surplus sharing package put together by the Government this year more than offsets overall cost increases due to inflation as well.
Source : Straits Times - 30 Aug 2008
Loading ...
Post a Comment
Tell me a bit about yourself; who you are, where you're from, what information you would like to see on this site. As I continue to provide you with Singapore property happenings, your feedback will encourage me to post more frequently. Thank you.