Dealing with inflation in budget 2008, the Ministry in its budget speech, unfolded the various means by which inflation could be managed. The article following hereunder explores the different facets of the policies of the government.
Singapore budget for 2008 also dealt with uncertainties pertaining to inflation in the country. Dealing with inflation in budget 2008 was one of the vital aspects taken into consideration. Reports suggest that inflation in Singapore in the FY2007 was 2% during the beginning of 2007. as it drew close to the end, this figure increased markedly.
In the month of December, 2007 Consumer price inflation was 4.4%. Expected rate of inflation during the FY2008 is 4.5 percent to 5.5 percent. But it is being presumed that inflation will be higher in the early months of the year as compared to the latter half. Dealing witih inflation in budget 2008, the Ministry announced several measures adopted for taming inflation.
Major Problems faced by Singaporeans due to Inflation:
Increasing living standards and expenses related to the same.
Cost of essential articles like milk, cooking oil, dairy products and bread on the rise.
Escalated global costs of oil as well as food lead to imported inflation.
The government has adopted a five-fold plan for dealing with inflation in budget 2008. They are:
By diversifying food product sources cost of imported food items would decrease. This would spare the country from succumbing to the fluctuating cost of commodities in the global markets.
Exchange rate :
Imported inflation may be moderately controlled by applying government’s policy pertaining to exchange rates. MAS or Monetary Authority of Singapore has for years maintained a very “modest and gradual appreciation” of Singapore dollar. In fact, for many years now, the exchange rate policy has been an ideal refuge for handling inflation.
Coping with inflation world wide :
The best way to acclimatize to the global inflation is to promote competitiveness in Singapore’s economy. Developing the potentialities, raining as well as educating individuals, enhancing employment opportunities, appealing to new investors may nullify the effects of global inflation to a considerable extent.
The government in Singapore assists individuals belonging to the lesser income groups to own a home of their own. This is usually carried out by providing subsidies to these people which allow them to have equity (in homes owned by them), which in due course rises and is adjusted for inflation. This in turn is beneficial when inflation causes the rentals to rise.
An important step taken by the government in helping people to cope with their living cost is that the government directly funds for the same. The system is devoid of providing assistance in form of making changes in price control. It deals directly with the affected individuals. This act is in sharp contrast to the other nations where several policies are implemented to assist the low income group. Such practices usually give rise to black marketeers.
In a nut shell, it may be said that the government’s policies embraced to tackle inflation is effective and intends to shield the country from the aftermath of inflation.