WHILE the upcoming increase in the Goods and Services Tax (GST) cannot be put off forever, its impact on Singaporeans is something that can be delayed by policy design, said Second Minister for Finance Indranee Rajah.

She noted that the 2-percentage point GST hike from the current 7 per cent, first announced in Budget 2018, was already deferred for a year in 2021 "in direct recognition of the hardship that was felt by people because of the pandemic".

"It's not something we can put off forever, but the exact timing is something that we have to think about. In deciding the timing for the GST hike, we are carefully considering all the overall economic conditions," she said, adding that the economy is recovering steadily.

Singapore's gross domestic product is expected to grow 3 to 5 per cent in 2022, barring fresh disruptions, according to the Ministry of Trade and Industry (MTI).

But irrespective of the date the GST hike takes effect, its impact on Singaporeans can be delayed through policy design, she said.

For example, the S$6 billion Assurance Package will delay the impact for most Singaporeans by 5 years, and for low-income Singaporeans, 10 years.

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"The date that it takes effect and the date that the impact is felt are 2 separate things, and we will continue to look out for low-income households and the majority of middle-income households," she said.

Indranee was responding to a question by Bukit Panjang MP Liang Eng Hwa, who asked if the government would consider delaying the GST hike to avoid adding to inflationary pressure.

Earlier, Minister of State for Trade and Industry Low Yen Ling told the House that Singapore's core inflation - which excludes accommodation and private transport - is expected to increase in the first half of 2022 before easing in the latter part of the year.

She cited continued external cost pressures in the near term, due to high global energy prices and persistent bottlenecks in global transportation as well as supply-demand mismatches in various commodities and goods markets.

MTI and the Monetary Authority of Singapore (MAS) expect these rises to be temporary and pressures to ease gradually over the course of the year, she said, noting that global oil prices should ease as production increases to catch up with demand.

"There are some signs that the global supply bottlenecks are abating, with pressure on input prices easing, and we are observing that the delivery delays are shortening," said Low.

"But we are cognisant that some of the supply chain issues such as the lack of production capacity for semiconductor chips and port congestions are also expected to take some time to be resolved," she added.

Meanwhile, wages are likely to continue growing with the recovering labour market as well as the government's rollout of progressive wage policies for lower-wage Singaporeans.

These factors will lead to core inflation average within the upper half of the official forecast range of 1 to 2 per cent, and for headline inflation to average 1.5 to 2.5 per cent, she said.

However, inflation affects different income groups differently, she said in response to a question from Aljunied GRC MP Leon Perera from the Workers' Party.

In the third quarter of 2021, headline inflation was 1.9 per cent year on year for the lowest 20 per cent income group; 2.2 per cent for the middle 60 per cent; and 3 per cent for the highest 20 per cent.

Low noted that the real median income of full-time employed residents was 1.1 per cent in 2021, while those in the bottom 20th percentile saw real income rise by 4.6 per cent.

Both Low and Indranee reiterated the government's effort to bring real wage growth for Singaporeans.

On whether the government could provide structural measures to provide long-term support instead of one-off vouchers, Indranee said: "The most sustainable way that we can help Singaporeans with the cost of living is actually to help them have good incomes."

She added that the government does not "pursue growth for growth's sake": "This government pursues growth because we want good jobs for people and we want them to have good incomes."