Help Measures for Households and Businesses Given Continued Rise in Food and Fuel Prices

Mr Liang Eng Hwa asked the Minister for Trade and Industry (a) what is the upcoming inflationary outlook in view of the latest rising food and energy prices; and (b) what are the further measures to mitigate the impact to households and businesses.

Inflation in Singapore has eased in recent months. The Consumer Price Index (CPI)-All Items inflation fell to 4.1% on a year-on-year basis in July, from 6.6% in January. Similarly, the Monetary Authority of Singapore (MAS) Core Inflation eased from 5.5% to 3.8% over the same period. For the rest of 2023, inflation should slow further as import costs are likely to remain lower relative to a year ago. For the full year, the Ministry of Trade and Industry (MTI) expects CPI-All Items inflation to average 4.5% to 5.5%, while the MAS Core Inflation is projected to be 3.5% to 4.5%. Nevertheless, upside risks remain, including from further shocks to the global economy and global commodity prices and supply chains.

The Government has taken a multi-pronged approach to help households and businesses cope with inflation.

We have introduced measures to help lower- and middle-income households manage the higher cost of living. For example, the Assurance Package in Budget 2023 provided a Cost-of-Living Special Payment of between $200 and $400 and additional Community Development Council (CDC) Vouchers for eligible Singaporean households.

The Government is also helping businesses manage rising costs. For instance, we enhanced the Enterprise Financing Scheme in Budget 2023 to reduce businesses’ borrowing needs. To mitigate higher energy prices, Government schemes, such as the Energy Efficiency Grant and the Resource Efficiency Grant for Emissions, help businesses become more energy-efficient.

MAS will continue to keep the Singapore dollar strong, which dampens imported inflation.

Finally, to help consumers make informed purchasing decisions, the Government has worked with the Consumers Association of Singapore (CASE) to onboard more retailers onto its Price Kaki app. Price Kaki, of course, promotes price transparency by providing easy and timely comparisons of grocery and hawker food prices.

We will continue to monitor trends in inflation and do even more to help Singaporeans, businesses and households, if necessary.

Thank you, Speaker. I have one supplementary question for the Minister of State. Would the Ministry consider efforts to encourage our consumers to switch to non-basmati white rice alternatives, some of which may even be healthier or more nutritious, in order to diversify away from our country's reliance on white rice imports?

I thank the Member for the question. Maybe also to share a little bit of background on global rice prices. Global rice prices, in fact, have risen in recent months because of India's ban on the export of non-basmati white rice and, of course, adverse weather conditions. So, if you look at the Food and Agriculture Organization's (FAO) All Rice Price Index, it has increased by 31.2% in August year-on-year. That is the rice price. But if you look at the global rice of most other food commodities, they have fallen. The overall FAO Food Price Index has actually dropped by 11.8% in August year-on-year.

I am giving Members the bigger picture so that we can see how we can better address this. The Government has also then strengthened food supply resilience both by diversifying the food import sources as well as encouraging local production.

So, in July 2023, when India banned the non-basmati white rice exports, we requested the Indian government for waiver from the ban for our domestic food security requirements. The Indian government acceded, and our multiple import sources and our rice stockpile scheme have also allowed us to mitigate the impact of these disruptions.

I also encourage Singaporeans to widen their choice of food, including different kinds of rice. I also encourage everyone to use the Price Kaki app by CASE to choose as well as to find out the prices of rice between different retailers as well. So, widen your scope. There are different sources of rice and different prices of rice as well.

Sir, we continue to see domestically driven cost pressure in addition to the external imported factors, like higher energy and commodity prices. I would like to ask the Minister of State – with this cumulative effect over the last two to three years, has the Government studied how that has impacted the low- to middle-income and the businesses, and what are the measures we can take to help mitigate some of the cumulative increases over the last two, three years?

The other question is on the trend of the energy and commodity prices. They are all elevated back again, and I wanted to know what MTI can do to help moderate some of these cost pressures, especially to the businesses.

I thank the Member for his supplementary questions. With regard to the impact, particularly on the lower- and middle-income households, in fact, if you look at the January to June figures, the impact of inflation rates were lower for low-income households. The CPI-All Items Inflation for the lowest 20 percentile and the middle 60% income groups came at 4.9% and 5.6% year-on-year respectively, compared to 5.9% year-on year for the highest 20% income group. So, it is less for the lower-income group.

Nonetheless, we are also aware that this same level of inflation can have a more adverse impact on lower-income households. I think both Minister Tan See Leng as well as Minister of State Chee Hong Tat have already explained as per in my reply how we are particularly helping the lower-income group through higher payouts, for example, in the Assurance Packages and the Good and Services Tax (GST) Voucher schemes. Also, as Minister of State Chee mentioned earlier, the Government will look at ways to further help Singaporeans, if necessary.

With regard to the energy prices, global demand for oil is expected to moderate, given the ongoing global economic slowdown and also China's slower than expected economic recovery. But despite coming off their peaks last year, global oil prices are expected to remain elevated in 2023 because of tightened supply constraints.

All in all, what the Government is doing is also on the fiscal stance but on the monetary policy stance. And it is for MAS to continue the current stance of appreciating the Singapore dollar to dampen imported inflation. In fact, MAS will review this stance in the next monetary policy meeting in October.