Forum Letter Reply to The Straits Times: FOOD IMPORTS; S'pore vulnerable to global price rises

WE THANK Mr Lee Ser Wei for his letter ('Stronger Singdollar, yet... Imported foodstuffs are still at the same prices or cost more'; Aug 6).

The increase in food prices is a global phenomenon.

According to the United Nations Food and Agriculture Organisation (FAO), global food prices rose by about 36 per cent in the first half of this year compared to a year ago. This can be attributed to weather-related supply disruptions as well as robust demand from fast-growing emerging economies.

Singapore imports more than 90 per cent of its food and is, therefore, vulnerable to global price increases. Hence we have always adopted a strategy of source persification - that is, to import from various food sources. This helps to ensure that we have a resilient supply of food, and, to a certain extent, minimise volatility in food import prices caused by short-term supply shortages.

Since April last year, the Monetary Authority of Singapore has allowed the Singapore dollar to appreciate against the currencies of our major trading partners. The stronger Singapore dollar has helped to dampen the increase in prices of our food imports.

During the first half of this year, Singapore experienced food consumer price index (CPI) inflation of 2.8 per cent. This is lower than the food CPI inflation in other regional economies such as China (12 per cent), Hong Kong (6.1 per cent) or Malaysia (4.7 per cent).

Not all food prices in Singapore have increased. The prices of some key food items have remained stable or declined. For instance, the average retail price of a 5kg packet of Thai fragrant rice (a key staple for most Singaporean households) cost $12.30 in June. That is 2.4 per cent less than the price in January. Prices of vegetables (such as cabbage and broccoli) and hen eggs have also declined since the start of this year.

Mrs Cindy Keng
Director, Corporate Communications Division
Ministry of Trade and Industry