Food, electricity and gas prices will continue to rise in Singapore (MAS)
SINGAPORE – Shopping for groceries could soon drive an even bigger hole in consumers’ pockets as the cost of uncooked food is expected to continue to rise even beyond this year due to global shocks, according to a review by the Monetary Authority of Singapore (MAS) showed on Thursday (April 28).
The cost of electricity and gas will also rise this year, with the recent spike in global energy prices driving up the prices of oil-related items.
MAS said that overall soaring global energy and agricultural commodity prices will increase domestic inflation for fuel, electricity and gas and uncooked food, which will in turn lead to an increase in the prices of transport and catering services over time.
“The Russian-Ukrainian conflict will have a significant impact on world food prices, which had already reached near record highs before the war,” the MAS said.
“As Ukraine and Russia are the world’s two main exporters of grains and edible oils, the conflict has led to a sharp increase in the prices of these products.”
Brent crude oil and natural gas are up 33% and 80% respectively so far this year, while wheat is up 43%.
Fertilizer costs have also increased due to reduced supplies from Russia and Ukraine, which could lead to lower crop yields as farmers around the world reduce fertilizer use, he said. he adds.
Meanwhile, poor weather conditions in other major grain producing regions like China and parts of America mean the grain supply shortfall is expected to persist into next year.
“The reduction in grain supply will lead to a prolonged increase in the cost of animal feed which will eventually translate into higher world meat and dairy prices,” MAS said.
This rise in global food prices will also feed through to Singapore’s import prices, causing domestic uncooked food inflation to rise over time.
But the good news is that the increase should be gradual in the short term and more modest than global indices, MAS said.
“The short-term incomplete pass-through of higher costs to domestic prices likely reflects the ability and willingness of firms at all stages of the supply chain to temporarily absorb some cost variations into their profit margins in in order to preserve their market share,” he added. he added.
Singapore’s diverse sources of imported food also help to mitigate the impact of these supply-driven price shocks, he said.
But going forward, domestic food prices will continue to reflect higher global food prices, which are expected to persist even beyond 2022.