While the Consumer Price Index (CPI) print for January was higher than market expectations of 4.4 percent year-on-year, OCBC has stated four reasons why Singapore should not be worried.
OCBC said the increase was well-flagged and anticipated by the market; the Ministry of Trade and Industry (MTI) had noted in the Q4 gross domestic product (GDP) growth revision that “inflation is expected to rise further to 5.0 percent to 6.0 percent in the first few months of this year. Thereafter, inflation should moderate, especially in the second half of the year”.
The low base effects, with CPI at just +0.2 percent year-on-year in January 2010, will begin to fade with time.
Property cooling measures are already helping to stabilise market transaction volumes, prices and market sentiment. Policymakers have stressed that the government will do more, if necessary, to anchor inflationary expectations, particularly in real estate.
Measures are also in place to help Singaporeans deal with the rising cost of living. These include the personal income tax rebate, Growth Dividends and additional U-save & S&CC rebates.