Mr Liang Eng Hwa: To ask the Minister for Trade and Industry (a) what is the outlook for inflation and cost of living in 2023; (b) what are the key drivers; and (c) whether there is further scope to reduce imported inflation with a stronger Singapore dollar.
Oral Answer (to be attributed to Minister of State for Trade and Industry Low Yen Ling)
1. Singapore’s inflation outlook this year is dependent on both external and domestic factors. Externally, global inflation is likely to stay firm in the near term as global energy and food commodity prices remain elevated despite coming off their peaks in 2022. At the same time, labour markets in advanced economies remain tight, thereby keeping pressure on wages.
2. Domestically, businesses are likely to continue to pass through elevated import and utilities costs, along with rising labour costs, to consumer prices. Meanwhile, housing rent and car inflation are projected to remain firm due to the strong demand for rental housing and tight COE quotas respectively.
3. Taking these factors into account, inflation in Singapore is expected to remain elevated in the first half of 2023, before slowing more discernibly in the second half, as global inflation moderates and the current tight domestic labour market eases. For 2023 as a whole, the CPI-All Items inflation is projected to come in at 5.5% to 6.5%, compared to 6.1% in 2022. Over the same period, MAS Core Inflation – which excludes accommodation and private transport costs – is expected to average 3.5% to 4.5%, compared to 4.1% in 2022.
4. On our monetary policy, as MOS Alvin Tan had explained to this House in November last year, the effects of MAS’ five successive monetary policy tightening moves will continue to dampen inflation in the year ahead. MAS remains watchful of the near-term risks to growth and inflation and the agency will review our monetary policy in April 2023.