MAS narrowed its inflation forecast to between 4.0 and 4.5 percent range, lower than current peak of 5.3 percent. Core inflation, which excludes accommodation and private road transport, remained at 2.7 percent in June, unchanged from a month earlier. Inflation was most punitive for the lowest 20 per cent of income earners (who don't drive), hitting them by as much as 6.3 per cent, compared to 4.6 per cent for the top 20 percent, and 5.2 percent for the 60 percent of middle income earners.
MAS's usual policy is to maintain a strong Singapore dollar to fight imported inflation. But accommodation (housing rentals) and private road transport (COE premiums) are not imported items, they are created locally. So are service and conservancy charges (S&CC).
Grassroots leaders are sounding the ground for another hike, citing "spiralling maintenance costs". Apparently town councils currently have reserves of about three years. Based on East Coast operating expenses of $20.5 million in 2011, they are sitting on as much as $60 million. What do they need such a big buffer for, investing in toxic instruments they way Holland-Bukit Panjang and Pasir Ris-Punggol Town Councils blew $12 million of their sinking funds? Money is supposed to be saved for a rainy day. Given the dark clouds predicted by MAS, shouldn't the sums be utilised to weather the storm instead of adding to the inflationary pressures?
Political analyst Lam Peng Er is pretty defeatist about the issue, saying complaints will fall on deaf ears, and most people will eventually get used to it. "How many of the past increases in municipal fees do you remember?" he asked. Indeed, who can keep track of the transport hikes, utility hikes, educational fee hikes, medishield hikes, .......