This story was printed from TODAYonline 
PM: Budget help for poor, but food price controls and food subsidies not on the cards
Monday • February 4, 2008
Loh Chee Kong and Sheralyn Tay
cheekong@mediacorp.com.sg
EVEN as shoppers feel the pinch of their dollars not going as far as they did in previous years, the Government has stepped in to reassure Singaporeans that it has heard their concerns over the rising cost of living.
In fact, this was the focus of several ministers, including the Prime Minister, at grassroots events around the island yesterday.
To help soften the pain of inflation which hit a 25-year high last year and might get worse this year, the Government "will have something to distribute, especially to help the poor and needy", in the upcoming Budget, assured Prime Minister Lee Hsien Loong yesterday.
However, Mr Lee cautioned against expecting unlimited handouts to tide Singaporeans through this difficult time.
"Government revenues have been strong. But we must be realistic — not everything can be solved by the Finance Minister becoming the God of Wealth," he said.
Measures are in the pipeline, with some already underway. For example, further efforts are being made to diversify Singapore's overseas food sources, to help contain rising costs, including the sourcing of frozen chicken supplies from Brazil and fresh fish from Chile.
And despite the growing pain of rising costs, a fresh report from the Ministry of Trade and Industry released yesterday shows that Singapore has one of the lowest rates of food inflation in the world.
The price of food in Singapore has risen 2.9 per cent from 2006 to 2007, while in Malaysia food prices have shot up 3.1 per cent and in Hong Kong by even more, by 4.5 per cent.
One surprising fact: Despite the rise in operational costs, a survey by the Department of Statistics also released yesterday showed that 75 per cent of 1,271 hawker stalls here have not increased prices.
While inflation affecting imported food prices rose to 12.1 per cent last year, the Consumer Price Index (CPI) for non-cooked sector — food sold to supermarkets, wet markets and shops — registered a 7.1-per-cent increase only.
Pointing to the difference between these two figures, Minister of State for Trade and Industry Lee Yi Shyan Lee said: "We believe that distribution channels like supermarkets and shops have absorbed the difference and not passed the entire cost increase to consumers."
Several outlets in food courts said that they were absorbing the rising costs, for the time being, to retain customer loyalty.
The CPI — which is used to measure inflation year-on-year — for food in Singapore had increased from 1.3 per cent to 1.6 per cent from 2005 to 2006, and then to 2.9 per cent last year.
The MTI expects that while the CPI is likely to be higher this year, especially in the first half, it would rise moderately in the second half.
Singaporeans would have to tighten their belts. "We had a good year last year but this year, we are celebrating Chinese New Year in somewhat more challenging circumstances," PM Lee said yesterday at a Chinese New Year dinner at Teck Ghee Community Club.
Citing the turbulent financial markets and the slowdown in the United States' economy, he said Singaporeans "have to expect more uncertainties ahead as the US problem (credit crisis arising from sub-prime mortgages) has not worked itself out and we don't know how bad it will be".
Singapore has been buffeted by external inflationary pressures — especially on food prices — driven by a myriad of factors, including rising affluence and consumption in China and India; disruption in food supplies caused by droughts and diseases; and farmers switching from growing crops for food to biofuels in face of higher costs of food transportation.
Speaking at a separate event in Keat Hong, Manpower Minister Ng Eng Hen said a supermarket's owner told him that his attempt to turn to Vietnam for cheaper sources of rice was thwarted by the fact that the Chinese had already bought all the rice stocks available.
Singaporeans should not be unduly worried, said Mr Lee.
"When we say that inflation will hit 4 to 5 per cent in the first half of 2008, it is already where we are in January, so we may not see another price hike going forward," he explained.
Still, some hawkers Today spoke to lamented that they had "no choice" but to raise prices as the costs of ingredients such as eggs and cooking oil continue to head north.
Said Mr Tan Kim Leng, who recently raised the price of his fried carrot cake from $2 to $2.50 a plate: "Even when the price of eggs rose I did not raise prices, but now all my basic ingredients cost (20 per cent) more so I have no choice."
Will the Government act to control food prices or subsidise the price of essential items? PM Lee said such a move would backfire, especially when Singapore imports all its food supplies.
Citing the chaos in countries like China and Malaysia as a result of panic buying, the Prime Minister added: "Price control is not something we can do and if you want the Government to subsidise, that's also not a good thing to do because it is very expensive and most of the food will be consumed by people who are not poor."
The most astute solution is to grow the economy and increase wages, he said.
Singaporeans generally enjoyed high pay raises and fat bonuses last year and upcoming projects such as the Formula 1 Grand Prix race and the Integrated Resorts would continue to generate economic growth.
Urging Singaporeans to band together and work with the Government in the months ahead, he said:
"We can overcome this problem. We have to stay together to keep Singapore competitive and growing."