Insight - How long can subsidies keep inflation down?

Headline inflation (total inflation including food and energy prices) is estimated to rise by 3% to 3.5% in 2022 and 3.5% to 4% in 2023 as the eventual subsidy rationalisation kicks in, post the next general election, said Socio Economic Research Centre executive director Lee Heng Guie.

AS inflation keeps rising, exacerbated by increasing food prices, many are wondering how long can hefty subsidies keep the inflation rate down?

The government estimates that without subsidies, inflation could hit 11%; the consumer price index (CPI) rose 3.4% year-on-year (y-o-y) in June, 2022, versus 2.8% y-o-y in May, 2022, driven by higher food and transport prices.