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Economy

Singapore’s core inflation rises to 2.7% in August amid uptick in services inflation

Household expenses in Singapore rose in August 2024 as core inflation, excluding private transport and accommodation, increased to 2.7% year-on-year. This followed a dip to 2.5% in July, its lowest in over two years. A joint MAS-MTI statement attributed the uptick to rising service costs, with services inflation climbing to 3.3% in August, spurred by holiday-related expenses.

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SINGAPORE: Household expenses in Singapore rose in August 2024, as core inflation, a key measure excluding private transport and accommodation, increased to 2.7% year on year.

This followed a surprise decline in July, when core inflation dropped to 2.5%, marking its lowest level in over two years.

According to a joint statement issued by the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI), the uptick in inflation was primarily driven by rising service costs.

Services inflation accelerated to 3.3% in August, up from 2.9% in July, driven by an increase in holiday-related expenses while airfares recorded smaller declines.

Overall or headline inflation, which includes all sectors, fell slightly to 2.2% year on year in August, down from 2.4% in July.

This decline was mainly due to a reduction in private transport prices, which offset the rise in core inflation.

Month-on-month figures, however, point to continued price pressures, with core inflation increasing by 0.3% and overall inflation by 0.7% during the same period.

MAS and MTI indicated in their inflation report on 23 September that despite some volatility in service costs, notably in overseas travel, services inflation is expected to moderate further in the coming months.

The strengthening Singapore dollar, which is gradually appreciating in trade-weighted terms, is likely to help control imported inflation as the year progresses.

The two agencies maintained their inflation forecasts for 2024. Core inflation is projected to average between 2.5% and 3.5%, while overall inflation is expected to remain in the range of 2% to 3%.

Among other spending categories, inflation in retail and other goods edged up to 0.4% in August, driven by a rise in household durables. Food inflation remained unchanged at 2.7%, as an increase in non-cooked food prices was offset by a reduction in food services inflation.

The report also noted that electricity and gas inflation held steady at 6.6% in August, as a smaller increase in electricity prices was balanced by a larger rise in gas prices. Accommodation inflation, meanwhile, eased slightly to 2.9%, reflecting a slower increase in housing rents.

Private transport prices fell by 1% in August, a reversal from the 0.9% increase recorded in July. This was attributed to a steeper decline in car prices, although petrol prices rose at a slower rate.

Looking ahead, MAS and MTI expect inflation to continue its moderating trend for the rest of 2024.

Global energy prices have been falling, and Singapore’s imports of intermediate and final manufactured goods are on a general downward trajectory.

Locally, increases in labour costs are slowing, and businesses are expected to pass these earlier cost increases to consumers at a reduced pace.

Private transport inflation is projected to decrease further as Certificate of Entitlement (COE) supply increases. Similarly, accommodation inflation should ease as more housing units become available for rent throughout the year.

However, MAS and MTI said risks to the inflation outlook remain.

Stronger-than-expected labour market performance could reignite wage growth, while global factors, such as fresh geopolitical shocks or adverse weather, could place renewed upward pressure on energy and food prices.

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Community

Over 950,000 Singaporean households to receive U-Save and S&CC rebates in October

On 30 Sept, the Ministry of Finance announced that over 950,000 households in HDB flats will receive U-Save and S&CC rebates in October under the GST Voucher scheme. The rebates will cover up to eight months of utility bills for 1- and 2-room flats. Additionally, electricity and gas tariffs will decrease for the next quarter due to lower energy costs.

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6 days ago

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30 September 2024

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SINGAPORE: More than 950,000 Singaporean households residing in Housing Board (HDB) flats will receive U-Save and service and conservancy charges (S&CC) rebates in October, as part of the permanent GST Voucher (GSTV) scheme and the Assurance Package.

The Ministry of Finance (MOF) announced on Monday (30 September) that these rebates form the third quarterly disbursement for the 2024 financial year.

The rebates are designed to help lower- and middle-income households cope with the Goods and Services Tax (GST) and rising cost-of-living expenses.

According to MOF, the U-Save rebates will cover about eight months of utility bills for those living in 1- and 2-room flats, and around four months of bills for households in 3- and 4-room flats.

For this round of disbursements, households in one-room and two-room flats will receive a total of S$190 in U-Save rebates.

Households in three-room flats will receive S$170, while those in four-room flats will get S$150.

Five-room HDB households will receive S$130, and households in executive or multi-generation flats will receive S$110.

No action is required by residents, as the rebates will be automatically credited to households’ utilities accounts with SP Services.

Similarly, the S&CC rebates will be credited directly by town councils.

Additionally, MOF noted that a portion of the rebates is intended to cushion the impact of rising utility costs, specifically due to the increases in carbon tax and water prices.

On Monday, SP Group, Singapore’s electricity grid operator, announced that electricity tariffs will decrease by 2.6% for the upcoming quarter, from 1 October to 31 December, due to lower energy costs.

This means that the electricity tariff will drop to 29.10 cents per kilowatt-hour (kWh) before GST, down from 29.88 cents in the previous quarter.

As a result, the average monthly electricity bill for a family living in a four-room HDB flat will decrease by S$3, from S$114.92 to S$111.92.

In a separate statement, City Energy, which produces and retails piped gas, announced a decrease in gas tariffs by 0.45 cents per kWh for the same period.

The new gas tariff is set at 22.97 cents per kWh before GST, down from 23.42 cents.

Both electricity and gas tariffs fluctuate quarterly, influenced by the volatility of global fuel prices.

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Economy

IRAS reports S$80.3 billion in tax revenue for FY2023/24, a 17% increase from the previous year

The Inland Revenue Authority of Singapore (IRAS) collected S$80.3 billion in tax revenue for FY2023/24, a 17% increase from the previous year. The rise reflects strong corporate earnings, higher wages, and increased consumer spending, contributing to essential services and economic development.

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1 month ago

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4 September 2024

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The Inland Revenue Authority of Singapore (IRAS) reported a total tax revenue collection of S$80.3 billion for the Financial Year (FY) 2023/24, marking a 17% increase from FY2022/23.

The rise is attributed to the country’s strong economic growth and nominal wage increases in 2022.

This revenue constitutes approximately 77.6% of the Singapore Government’s Operating Revenue and 11.9% of the nation’s Gross Domestic Product (GDP). The taxes collected will be used to fund essential services, support social development programmes, grow the economy, and enhance Singapore’s living environment.

In addition to tax collection, IRAS processed close to S$2.3 billion in enterprise grants, benefiting over 131,000 businesses and workers. The arrears rate for Income Tax, Goods and Services Tax (GST), and Property Tax remained low at 0.64%.

Breakdown of Tax Revenue

Corporate Income Tax (CIT) showed the largest increase, rising by 25.6% from S$23.1 billion in FY2022 to S$29.0 billion in FY2023, due to strong corporate earnings. CIT accounted for 36.1% of total revenue collection.

Individual Income Tax (IIT) accounted for 21.8% of the total, with revenue increasing by S$2 billion to S$17.5 billion, driven by higher wages and an increase in the number of taxpayers.

GST contributed 20.7% of the total revenue, with collections rising by S$2.6 billion to S$16.6 billion, a result of higher consumer spending and the increase in the GST rate.

Property Tax contributed 7.4% (S$5.9 billion), and Stamp Duty accounted for 7.2% (S$5.8 billion), though Stamp Duty saw a decline of S$0.1 billion due to lower property transaction volumes.

S$2.3 Billion in Enterprise Grants Processed

IRAS also disbursed S$2.3 billion in grants to support businesses and workers under several schemes, including the Progressive Wage Credit Scheme (PWCS), Senior Employment Credit (SEC), and Jobs Growth Incentive (JGI). These grants were designed to assist businesses in maintaining operations and supporting workers’ employment.

Digital Solutions for Businesses

IRAS continues to enhance digital solutions to facilitate tax compliance for businesses.

Initiatives include:

  • InvoiceNow: This e-invoicing system, set to become mandatory for GST-registered businesses starting in November 2025 for new GST registrants, allows for seamless transmission of invoice data to IRAS for tax administration.
  • One-Stop Payroll (OSP): Developed in collaboration with the Central Provident Fund Board, Ministry of Manpower, and GovTech, this system allows businesses to submit wage-related information to various agencies through a single platform. These initiatives build on IRAS’ existing digital services, such as the Submission of Employment Income API.

To date, over 120 software providers have partnered with IRAS, offering 46 software products designed to simplify tax filing and payments for businesses.

In FY2023/24, it audited and investigated 9,590 cases, recovering approximately S$857 million in taxes and penalties from non-compliant taxpayers.

IRAS aims to ensure timely tax filing and payment while addressing tax avoidance and evasion.

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