The move to adjust instead of offset the cost pressures from the supply side is prudent and remains relevant for the medium term. Firms that apply the right productivity strategies will be able to offset the rising business costs over the longer term.
Singapore (PRWEB) July 30, 2012
Singapore’s Ministry of Trade and Industry and the Monetary Authority of Singapore (MAS) have recently announced that the republic’s consumer price index (CPI) has risen to 5.3% year-on-year (y-o-y) in June, up from 5% in May, primarily due to rising accommodation and private road transport costs.
Accommodation costs have increased by 10.8% y-o-y, in the absence of government rebates
on the cost of minor repairs and maintenance this year. Additionally, the cost of private road transportation has increased at 9.7% in June due to an increase in certificate of entitlement (COE) premiums.
On the other hand, other major CPI categories demonstrated downward trend. Services and food inflation declined slightly to 2.8% and 2.3% respectively in June, offset by stronger year-on-year increase in prices of retail products. Hence, excluding the accommodation and private road transport costs, Singapore’s core inflation was stable at 2.7% for the third consecutive month.
MAS anticipates that the core inflation will ease further in the second half of this year. Overall inflation, on the other hand, is forecast to to remain above its historical average albeit lower on average compared to H1 2012.
In May, and in a bid to address rising inflation and business costs, MAS had reaffirmed its commitment to price stability over the medium term by allowing a stronger rate of appreciation of the Singapore dollar nominal effective exchange rate since April 2010.
“The move to adjust instead of offset the cost pressures from the supply side is prudent and remains relevant for the medium term. While firms may expect more to be done, we are optimistic that should they apply the right productivity strategies, such as tapping the PIC Scheme, for example, they will be able to offset the rising business costs over the longer term,” said Mr. James Nuben, Head of Tax Division at Asiabiz Services, a Singapore company registration specialist.
“It is crucial, during such a period, that we maintain a strategic open-door policy to allow investors to come in and to encourage entrepreneurs to start a Singapore company that generate employment opportunities. It is key to maintain a robust and open economic environment to ensure that business activity continues and that economic horizons remain wide and open for our businesses to tap,” added Mr. Nuben.
The tighter monetary measures by MAS is set to result in approximately 1 - 3% GDP growth this year.
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