Singapore is going ahead with the planned hike of GST from 8% to 9% with effect from Jan 1. The government is considering a bigger "Assurance Package" in a mix of vouchers and other subsidies, to help people deal with the higher costs of living as a result of the higher consumption tax, says Prime Minister Lee Hsien Loong.
Deputy Prime Minister Lawrence Wong, who is also the Finance Minister, has been promised to "study it carefully".
"Let’s wait -- and of course, we hope for good news," says Lee, at the National Day Rally on Aug 20.
Singapore is facing an unfamiliar period of inflation, as its open economy cannot stand in isolation versus the same trend seen across both developed and emerging economies alike.
MAS' survey of professional forecasters released in June showed that the median forecasts of consumer price index (CPI) All Items inflation for 2023 was 5%, and the MAS Core Inflation was 4.1%. This is in contrast to the figures of 3% and 4.1% for 2024, respectively.
The government, via the Monetary Authority of Singapore, has been trying to cope with the inflationary pressures by strengthening the Singdollar constantly so that imports can be cheaper. By doing so, the spending helped lead to a loss of $30.8 billion for the FY ended March 31.
See also: 5% of NETS terminal network affected in ongoing disruption; customers advised to use SGQR or cash
The other way to cope with higher costs of daily necessities is via a series of subsidies and rebates of utilities bills.
"However, we must understand the Government cannot give out subsidies infinitely," warns Lee.
"The long-term solution is to make ourselves more productive, transform our businesses, and grow our economy. Then our real incomes can rise and we can all be better off," he adds.
See also: Singapore’s $260,000 Toyotas fuel angst over wealth gap
Lee points out that the government has been stabilising prices through various other ways.
Half a century ago, what is known as NTUC FairPrice was set up to help maintain daily necessities at a reasonable level and compel other retailers to hold prices at competitive levels.
Lee says that to reduce daily expenses, people here can make smart choices when purchasing daily necessities.
"Many Singaporeans know how to compare prices. They know which supermarket has the lowest price on which day for which item. They can go to NTUC FairPrice today, Sheng Siong tomorrow and Giant the day after," says Lee.
Sheng Siong is a Singapore-listed supermarket chain while Giant is part of the Singapore-listed, Hong Kong-based DFI Retail Group.
"Some are expert, use mobile applications such as Price Kaki, or access chat groups to decipher where the best “lobangs” (deals) are," says Lee.
