DPM Tharman: Average S'porean won't feel the sharp effects of inflation

The average Singapore will not feel the effects of a sharp inflation, Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam said today in a speech at this year's May Day dinner.

He acknowledged that the 5.2 per cent increase in the Consumer Price Index (CPI) for March 2012 compared to a year ago, was a "high figure".

But more than half of this inflation rate of 5.2 per cent comes from higher COE premiums on cars and the effect of higher market rents on homes, the Manpower Minister said.

So those who already own their homes and are not buying a new car will be unaffected.

In fact for most Singaporeans, inflation in actual household expenses is lower than 5 per cent.

Mr Tharman explained that the increase in prices of daily necessities and essential services, such as food, clothing and footwear, and education, has actually been much more moderate, at 3.0 per cent or lower.

Nevertheless the Government is closely monitoring the situation, including prices of everyday goods and services, Mr Tharman said.

Inflation remains an important challenge and it is also one that union leaders are most concerned about, he said.

The Monetary Authority of Singapore has been gradually strengthening the value of the Singapore dollar to reduce the impact of imported inflation.

Actions have also been taken to cool the property market as an overheated property market with inflated property prices, while by themselves not part of the CPI, can drive up other prices.