Budget 2024 should keep cost-of-living handouts targeted to avoid fuelling inflation

MANY Singaporeans may be watching the Budget Statement this Friday (Feb 16) for news of fresh financial support for households. Indiscriminate handouts, however, could hurt rather than help the country’s efforts to fight inflation.

Singapore’s inflation has been easing but is expected to stay elevated, with core inflation projected to average 2.5 to 3.5 per cent this year. Against this backdrop, the government has said that it is studying ways to provide more cost-of-living help. This January, every Singaporean household received some S$500 in Community Development Council (CDC) vouchers. Some watchers expect more of such largesse in Budget 2024, with estimates of up to S$2 billion in direct transfers. This could take the form of more CDC vouchers or special cash payouts, for example.

All this would be in the name of helping households cope with cost-of-living pressures. Yet that could, ironically, help those pressures to persist.