Deflation In Singapore Amid Covid-19 Pandemic

Core inflation in Singapore has entered the negative territory since February 2020, following the onset of Covid-19 pandemic. The deflation accelerated to 0.4 per cent in July 2020 and narrowed to 0.1 per cent in September 2020. The figures do not reflect the impact from price fluctuations in private transport and accommodation. To learn the definition of core inflation and what is included in its computation, you may sign up for economics tuition Singapore with a reputable economics tutor Singapore.

Consumer Price Index

The consumer price index which measures the price changes in goods and services increased to zero per cent in the month of September, up from -0.4 per cent a month earlier. On the domestic front, decline in costs of most goods and services slowed down moderately in September 2020. Prices of accommodation and food were largely unchanged. This is mainly driven by depressed domestic demand as a result of lower disposable household income. Unemployment rate has reached all-time high in Singapore with retrenchments and pay cuts by various employers badly hit by the ongoing pandemic. In consultation with your economics tutor Singapore in economics tuition Singapore, discuss the economic implications of a high unemployment rate in Singapore. Private transport, utilities, telecommunication, food and tuition are among goods and services included in the computation of consumer price index while income tax, purchase of properties and loan repayments are excluded. With guidance from your economics tutor Singapore in your economics tuition Singapore class, explain why certain items are excluded from the computation of consumer price index.

Despite the negative economic outlook, it is estimated that core inflation will turn positive in 2021. According to the Monetary Authority of Singapore and the Ministry of Trade and Industry, core inflation in Singapore will be between zero and one per cent. In discussion with your economics tutor Singapore in economics tuition Singapore, explain why a mild inflation is preferred. You may approach your economics tutor Singapore in your economics tuition Singapore class for a case study.

Weak Revenue Position

Deputy Prime Minister Heng Swee Keat has warned of the weak revenue position of Singapore in the coming years. However, expenditure will remain high as the government continues to render the much-needed support for local businesses and residents. Singapore government has pledged a total of S$100 billion in support measures to help local businesses and residents tide over this trying period. To read more about Singapore’s S$100 billion budgets, you may visit Economics Cafe Learning Centre’s website. Economics Cafe Learning Centre is the best economics tuition Singapore centre founded by the best economics tutor Singapore, Mr Edmund Quek. The economics tutor Singapore has a Master’s Degree from the National University of Singapore, majoring in Economics. Over the past 20 years, the economics tutor Singapore has helped countless students in his economics tuition Singapore attain an ‘A’ in their GCE ‘A’ Level economics examinations.

The government’s revenue is expected to fall significantly this year, particularly from GST collection. Singapore government has drawn a total of S$52 billion from its reserves, accumulated from past budget surplus in the past decades. Singapore is one of the very few governments that run a budget surplus every year. You may consult your economics tutor Singapore in your economics tuition Singapore class about other governments that run a budget surplus. However, with the massive government support to keep its economy afloat, Singapore government is expected to run a budget deficit of S$74.2 billion this year. If the effects of Covid-19 continue to linger, its revenue position will continue to be weak for the next few years.

Vincent Chew

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