A microeconomic study of Singapore inflation reveals that the rate of goods and GST in Singapore during 2017 increased from 5% to 7%. In the same year, incomes also increased, which changed consumers’ expenditures on various goods and commodities. The inflation situation remained mild in 2017 for the entire year while consumer prices increased by 0.6%. The Ministry of Trade and Industry Singapore revealed that road transport inflation decreased to 2.6% from 4% in December. The services inflation rate also fell to 1.3% from 1.6% in December.
There was also a significant reduction in airfare prices in November 2017 (from 1.6% to 1.3%). However, there was a slight increase in fees for telecommunication services during the later months of 2017. Regarding food items, the prices also dropped to 1.4% from 1.5% in December. Similarly, accommodation prices fell in December in Singapore from 3.9% to 3.8%.
In 2018, the statistics reveal that the inflation rate will remain between 1 and 2% while the core inflation can become 0%. The inflation in Singapore in 2018 is not going to rise rapidly as observed in 2017, a mild increase in inflation is expected in the future. At the same time, the prices of food and consumer goods are likely to increase slightly as revealed by MTI and MAS.
The graph above shows that demand is price elastic, and there is a fall in demand for quantity compared to a rise in price. Luxury goods or household items are good examples of price-elastic goods. Moreover, goods like cigarettes, food, and other necessities will be consumed in larger quantities. There will be restrained cost pressures in the economy in the year 2018. The petrol prices also rose in December 2017, increasing parking fees as well.
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Due to the increase in private road transport costs, the consumer price index rose to 0.6% in Singapore last year. The core inflation does not include the figures for private road transport fees and accommodation costs, which remain unchanged from previous months. While cultural and recreation services fees also increased slightly. The pace of rising prices of non-cooked food was slow. Therefore, the food inflation also remained unchanged at 1.5%. However, retail items showed an overall price rise of up to 0.5%. Personal care product prices also fell in November 2017.
The Future Trends
According to MAS’s revelations, the future outlook for Singapore’s inflation will be around 0.5% or less. It will remain within the range of 0% to 1% in the year 2018. These trends of inflation in Singapore do not reveal that there is a major risk of higher inflation in the country during 2018. The next MAS policy meeting will be held in April 2018. The banks have already started normalizing monetary policy in Singapore. The researchers are looking at a rate of 0.5% at the start of the year. As more data will come into the central banks later in 2018, the central bank’s policy will become clearer.
According to Reuters, Singapore’s inflation was unchanged from January 2018 to December 2017. Even though the annual core inflation rate increased slightly, MAS (Monetary Authority of Singapore) hopes to see mild changes in the inflation rate. Apart from utilities and housing, prices in all departments and categories were higher last year. Gas and electricity prices also increased by 6.6% in October 2017.
References
Batavia, Gaurav. “Singapore January Inflation Seen Unchanged From December: Reuters Poll.” Seeking Alpha. N.p., 2018. Web. 22 Feb. 2018.
“Microeconomics Essay: Demand And Supply, GST And Rising Incomes.” Basecamp Learning Centre. N.p., 2018. Web. 22 Feb. 2018.
“Singapore Inflation Rate | 1962-2018 | Data | Chart | Calendar | Forecast.” Tradingeconomics.com. N.p., 2018. Web. 22 Feb. 2018.
“Singapore Inflation Remains At 0.4% In October.” Channel NewsAsia. N.p., 2018. Web. 22 Feb. 2018.
“Singapore Inflation Rises 0.6% In November.” Channel NewsAsia. N.p., 2018. Web. 22 Feb. 2018.
WILLIAMS, ANN. “Singapore Inflation At 0.6% For 2017 After Consumer Prices Edge Up 0.4% In December.” The Straits Times. N.p., 2018. Web. 22 Feb. 2018.
