Inflation in Singapore

Mr. Tan,

What are your view on the inflation in Singapore. Are we experiencing just a little inflation of 1~2% or it is higher? I feel that transportation and health care costs are increasing but I am unable to pin-point how it is reflected in the inflation rate.

REPLY

The method used to calculate the inflation rate, or consumer price index, is probably not satisfactory. This applies to many countries, not only Singapore.

The key drawback is the time delay in capturing the changes in the price. For example, many people already see that rental rates, for housing and offices, have already increased. But it affects only people who rents the property and whose leases have come up for renewal. The full impact may take a few years to be fully reflected in the inflation rate.

A better method is to reflect the changes in the prices more quickly, but it requires a different approach. Who wants to decide to make this change? The statistician will follow the traditional method (which was devised a long time ago), unless there is a decision taken by a visionary leader.