Effect of Increases in Public Transport Fares and Higher COE Prices on Inflation in 2024

Mr Gerald Giam Yean Song asked the Minister for Trade and Industry what is the extent to which increases in public transport fares and higher COE prices are projected to affect inflation in 2024; and (b) what further measures is the Government taking to contain inflationary pressure caused by such cost increases to mitigate its impact on living and business costs in 2024.

Public transport fares1 account for 1.6% of the Consumer Price Index (CPI)-All Items inflation basket and 2.5% of the Monetary Authority of Singapore (MAS) Core Inflation basket, which excludes private transport costs. Meanwhile, car prices, which include Certificate of Entitlement (COE) premiums, account for 7.4% of the CPI-All Items inflation basket.

The recently announced 7% increase in public transport fares is expected to contribute 0.17 percentage point to the MAS Core Inflation rate in 2024. We are unable to project COE prices next year and, hence, their impact on inflation.

The Government will continue to ensure that public transport remains affordable. We currently subsidise public transport services by more than $2 billion every year, or more than $1 for every journey. On top of this, the Public Transport Council has been able to moderate the fare increase this year due to an additional Government subsidy of about $300 million in 2024. At the same time, the Government will make available Public Transport Vouchers worth $50 each to help lower-income resident households cope with the fare increase.

In addition to these public transport-related measures, the Government has enhanced cost-of-living support for all Singaporean households as part of the $1.1 billion Support Package announced in September. These include additional cash payments, CDC Vouchers and U-Save Rebates. This builds on existing support provided to households at Budget 2023, such as the enhancements to the permanent GST Voucher scheme and the Assurance Package. The Government is also helping businesses to manage rising costs. For instance, the Enterprise Financing Scheme was enhanced in Budget 2023 to help ease the cashflow and financing constraints of businesses.