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S'pore's food inflation remains low by international standards

By S Ramesh and Margaret Perry, Channel NewsAsia
03 February 2008

SINGAPORE: Singapore's food inflation has remained low by international standards, according to a survey of cooked and uncooked food prices worldwide.

The Trade and Industry Ministry (MTI) said while Singapore is not spared from the general increase in global food prices, the survey of 14 countries from 2005 to 2007 showed Singapore had one of the lowest rates of food inflation for all three years.

That is because Singapore's open and competitive environment kept food price increases less pronounced than for most countries.

In 2007, food inflation stood at 2.9 percent, compared to 1.6 percent in 2006 and 1.3 percent in 2005.

The ministry's survey results follow concerns expressed by many Singaporeans that food prices had gone up.

MTI said only three countries – Japan, Australia and South Korea – had a lesser rate of food inflation than Singapore.

Out of the 14 countries surveyed, China had the sharpest increase in food prices last year at 12.3 percent.

The ministry explained that consumers could choose from a wide range of options, allowing them to switch to cheaper alternatives should some businesses charge unreasonable prices.

The Agri-Food & Veterinary Authority has also diversified food sources so that Singapore is less vulnerable to disruptions.

While Singapore has traditionally sourced vegetables from Malaysia and China, the country is now getting them from Vietnam and Indonesia as well.

Imported food prices here rose 12.1 percent between December 2006 and December 2007, but this has not been reflected on supermarket shelves where the prices of non-cooked food rose by only 7.1 percent.

Minister of State for Trade and Industry Lee Yi Shyan said: "What we believe is the distribution channel - the supermarkets and shops - have absorbed the difference, they have not passed on the entire cost difference to the consumers."

Businesses have also played a responsible role in moderating the pace of increases by not passing on the full extent of price increases in their inputs immediately.

Most hawkers, in particular, have shown restraint.

According to the Department of Statistics, about 75 percent of hawkers surveyed held prices constant since June last year.

The ministry said the food component of the Consumer Price Index has increased in recent months.

However, the cooked food price increases have been smaller than those for non-cooked food, and that is an indication that hawkers and restaurants have not passed on all the increases in raw food prices to consumers.

MTI stressed that the rising trend for food inflation is mainly driven by external factors such as the surge in oil prices and adverse weather in supplier countries.

The ministry added that Singapore's best strategy against food inflation is to sustain economic growth over the medium term and create quality jobs for Singaporeans.

- CNA/so