S'pore June inflation rises 7.5% on higher food, housing costs
By May Wong, Channel NewsAsia | Posted: 23 July 2008 1333 hrs

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SINGAPORE: Singapore's consumer inflation stood at a 26-year high in June, rising 7.5 per cent compared with a year ago, according to latest figures from the Department of Statistics.

This was due mainly to higher costs of food, housing and transport and communication.

Last month's rate was the same as that recorded for May and April.

Overall, Singaporeans paid 9.2 per cent more for food than they did a year ago because of more expensive items such as cooked food, rice, milk products, fresh poultry and vegetables.

Housing costs also went up by 13.4 per cent on year because of higher accommodation costs and electricity tariffs.

With higher petrol charges and taxi fares, the cost of transport and communications rose 5.1 per cent on year, offsetting the effect of lower car prices and road tax.

Those seeking healthcare had to pay about 5.8 per cent more due to increases in hospitalisation fees, charges for medical consultation and specialist services.

Excluding accommodation costs, which form one-fifth of the consumer price index, prices rose 6.5 per cent in June compared with a year ago.

Adjusted for seasonal variations, June's consumer price index was 0.4 per cent higher compared with May.

The rising cost has led more middle-income families in Singapore to turn to community agencies for help.

One such agency is the a Family Service Centre, which offers programmes like financial security workshops and recruitment drives for unemployed residents.

Centre officials said middle-income families are usually asset-rich but cash-poor, with debt and loan issues.

"Things like utility bills, and sometimes even food, are compromised because they have to pay for their loans and other things. At the (workshops), we talk about lifestyle issues, like having to adjust to a more affordable lifestyle. There are a lot of adjustments and a lot of evaluation of needs versus wants, what they can cope and what they can't cope with," said Nur Hilyah, head of the Ang Mo Kio Family Service Centre.

The centre said more families earning about S$2,500 a month are coming forward for help. About three years ago, the centre saw about 2 per cent of this group asking for assistance. But this year, this has jumped three-fold to 6 percent. The centre expects this trend to continue at least for another year.

But it's not all doom and gloom.

Economists said inflation has peaked at 7.5 per cent and expect it to come down - but not to the level of 1-1.5 per cent seen previously.

"I don't expect inflation to tumble from here... I think it will remain well above the kind of inflation rates that Singapore has been used to over the last couple of decades. Prices will rise further over the next six months and that's why I'm looking at an average inflation rate of 6.5 per cent. I expect the government to raise its inflation range to perhaps 5.5-6.5 percent," said Robert Prior-Wandesforde, a senior Asian economist at HSBC.

The Singapore government expects inflation this year to be between 5 and 6 per cent.

- CNA/yb/ls