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, the incomes also increased which changed the consumer’s expenditures on various goods and commodities. Inflation situation remained mild in 2017 for the entire year while consumer prices increase 0.6%. The Ministry of Trade and Industry Singapore revealed that road transport inflation also decreased to 2.6% from 4% in December. The rate of services inflation also fell to 1.3% from 1.6% in December.
There was a significant reduction in the airfare prices in November 2017 as well (from 1.6% to 1.3%). There was a slight increase in fee of telecommunication services however during the later months of 2017. As far as food items are concerned, the prices also dropped to 1.4% from 1.5% in December. Similarly, the accommodation prices also fell in December in Singapore from 3.9% to 3.8%.
In the year 2018, the statistics reveal that inflation rate will remain between 1 to 2% while the core inflation can become 0%. The inflation Singapore in 2018 is not going to rise rapidly as observed in 2017, a mild increase in inflation is expected in the future. While the prices of food and consumer goods are likely to go up slightly as revealed by MTI and MAS.
In the graph above, it is obvious that demand is price elastic and there is a fall in demand for quantity as compared to rise in price. Luxury goods or household items are a good example of price elastic goods. Moreover, goods like cigarettes, food and other necessities will be consumed in larger quantity. There will be restrained cost pressures in the economy in the year 2018. The petrol prices also rose in December 2017 which increased the rates in parking fees as well.
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Due to the private road transport costs increase, the consumer price index also rose to 0.6% in Singapore last year. The core inflation does not include the figures for private road transport fee and accommodation costs which remain unchanged from previous months. While cultural and recreation services fee also increased slightly. The pace of rising prices of non-cooked food was slow. Therefore the food inflation also remained unchanged from 1.5%. Retails items, however, showed an overall rise in price up to 0.5% The personal care products prices also fell in November 2017.
The Future Trends
According to revelations of MAS, the future outlook on the Singapore inflation is going to 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 does not reveal that there is the major risk of higher inflation in the country during 2018. The next policy meeting of MAS is going to be held in April 2018. The banks have already started the normalization of 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 policy of central bank will become more clear.
According to Reuters, the Singapore inflation was observed to be unchanged from January in 2018 to December 2017. Even though the annual core inflation rate increased a little bit, MAS (Monetary Authority of Singapore) is hoping to see mild changes in the inflation rate. Apart from utilities and housing, the 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.
