SINGAPORE: Singapore’s core inflation continues ticking upwards. Official information released on Jul 25 showed the four. 4 per cent year-on-year increase in June , the highest since Nov 2008 amid a global financial crisis.
Even though Monetary Authority of Singapore (MAS) provides projected it to ease after peaking in the third one fourth, core inflation can be expected to remain high at around 3 or more. 5 per cent to 4 per cent towards the end of the season.
This is unsurprising given continued global supply chain disruptions, the ongoing Russia-Ukraine war and the long lasting effects of the COVID-19 pandemic, from which Singapore is unable to fully insulate itself.
Rising costs will affect all Singaporeans , particularly the reduced to middle-income, who seem to spend a large part of their budget upon essential items like as well as utilities.
IS A WAGE-PRICE SPIRAL PROBABLY?
Faced with a higher cost of living, will employees requirement larger pay raises ? Some are worried that a wage-price spin out of control could be in the making. This is when workers ask for higher wages in order to offset inflation and keep purchasing power, plus employers in turn increase prices to counter higher labour costs.
When inflationary expectations become created, it becomes difficult for regulators to bring straight down inflation without incurring the high costs of slower growth plus higher unemployment.
However , there are reasons to believe a wage-price spiral may not take underlying here.
CONTUDO managing director Ravi Menon pointed out within July that automatic wage indexation is not common in Singapore, and that the pass through from prices in order to wages has been in the past weak. This is in contrast to countries like Belgium and Luxembourg exactly where salaries are immediately adjusted according to pumpiing, a practice that may be difficult to sustain because prices soar.