REGIONAL ECONOMIC CRISIS (Impact on cost of living)

Mr Sin Boon Ann asked the Minister for Trade and Industry if he will give an update on the impact of the regional economic crisis on the cost of living in Singapore and whether Singaporeans on the whole experience a lower standard of living as a result.

Mr Lee Yock Suan: Mr Speaker, Sir, the regional economic crisis has not pushed up our cost of living. In fact, consumer prices rose by only 1.1% in the first quarter of 1998, down from 1.7% and 2.3% in the first half and second half of 1997 respectively. There are three reasons for the low inflation. First, although the Singapore dollar has depreciated against the US dollar, it has strengthened against the regional currencies. Overall, the Singapore dollar has remained relatively stable on a trade-weighted basis. This has kept imported inflation at bay. Second, domestic inflationary pressures are low as a result of slower economic activity, weaker consumer sentiments and keener retail competition. Third, commodity prices like oil have declined. Our standard of living has not deteriorated. Nominal wages increased by 4.8% in the first quarter of 1998. With an inflation rate of 1.1%, real wages have risen by 3.7%, the same as in 1997.