The Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) have warned that inflation is likely to remain elevated in the short term.  This is despite a slight easing of the Consumer Price Index to 5.5% in Dec 2011 (from 5.7% in Nov 2011).  Inflation for the whole of 2011 was 5.2%.

The MAS has further reported the the core inflation index, which excludes private road transport and accommodation was much lower.  The overall core inflation for 2011 was 2.2%.

Employers planning for their annual wage adjustments should take these indicators into consideration.  Any increment less than the inflation rate will mean a reduction of real wages.  However, this needs to be balanced with the overall economic outlook for 2012.  Increment rates of between 1.5% and 2.5% are fairly common, although some employers have already introduced wage freezes in preparation for what is expected to be a rough year ahead.