I saw a lot of people bashing this article based on the headline and the opening paragraph, but it's actually pretty good. Of course, it's sexier to bash an article that you haven't read to preach to the choir.
Does inflation mean consumers have to keep paying more? | The Straits Times
Inflation does not mean consumers have to accept higher prices and resignthemselves to having lower purchasing power.
Hedging against inflation is easier said than done but people can take a multi-pronged approachto protect themselves, said Singapore Management University (SMU) assistant professor of finance Aurobindo Ghosh.
Controlling spending and focusing more on needs are essential at such uncertain times, he noted,adding that it is important to understand saving and investment needs. "There is a need to have access to emergency funds but, beyond that, savings should be prudently invested in a diversified asset portfolio.
"Prof Ghosh, who is also director of the Citi Foundation-SMU Financial Literacy Program for Young Adults, said that people could also pay back debt that carries higher interest rates and refinance loans before rates go up further.
People are already finding ways to make their dollar stretch.
Education-sector worker Huang Jia Li has cut back on food deliveries, opting instead for home-cooked meals or takeaways from hawker centres.
She also tries to take the bus or train where possible instead of a cab or private-hire car.
"Aside from tightening our belts, I am opting for a regular forced savings model and just boughtan insurance policy where its main purpose is to grow one's savings," said Ms Huang, 49."
A small percentage of my salary is deducted every month and channelled into this savings plan."
Research engineer Muhammad Adri Abu Bakar, 31, is also taking on inflation: "At one point, I was investing up to 70 per cent (of my income) in a wide range of assets like funds, equities and an endowment plan, but not anything high-risk."
He has since increased his savings so he has cash on hand to foot the down payment on his own home after his rental lease ends.
Sharing a flat with two friends has also helped to reduce his rent from $850 - when he previously rented a room by himself in the same area - to about $750.
However, it is not entirely up to consumers to figure out how to cope with rising prices.
Singapore has a small and open economy where almost 40 cents of every dollar spentdomestically go to imports.
The Monetary Authority of Singapore (MAS) manages the exchange rate, which allows it to keepa lid on imported inflation.
With inflation rising faster than expected, the central bank took the unusual step last month of tightening its monetary policy stance in between its regular policy meetings, which occur in April and October.
It took the first step last October when it shifted to a gradual appreciation path for the Singdollar,from zero per cent previously.
A stronger Singdollar dampens the inflationary impact of higher import prices.
Most economists reckon that MAS is not done with tightening yet and expect another move in April.
The Government has also given assistance through the likes of Goods and Services Tax (GST) Voucher - U-Save rebates of up to $595 last year to help with household utility bills.
It also said the impact of the upcoming GST hike - from 7 per cent to 9 per cent - will be delayed for the majority of households in Singapore through the $6 billion Assurance Package, which will be disbursed alongside the GST increase.
More details about the hike are expected to be announced at the upcoming Budget.
