FOOD inflation has eased in the first half this year, but is still hovering above the historical average, according to latest Ministry of Trade and Industry (MTI) figures.
The Consumer Price Index (CPI) for food receded to 2.3 per cent in June, from 3.8 per cent in January this year. This remains above the historical average of 2 per cent since early 2011.
Senior Minister of State for Trade and Industry and National Development Lee Yi Shyan, expects the CPI to be moderated going into the second half of this year.
Even though Singapore is "taker of global food prices" due to its high food import percentage, Mr Lee noted that the price gains for import and domestic food have not been as drastic as global commodity price hikes.
He attributed this to the appreciation of the Singapore dollar and strong competition which has "kept local markets efficient''.
Another important factor is the long-term contractual agreements food importers have with their suppliers.
"Many of the supply contracts here are signed from three months to a year, so short term price fluctuations can't fit into the sales cycle or contract. In a way, this has assured us of price stability," said Mr Lee who heads the Retail Price Watch Group (RPWG) which keep tabs on excessive price increases of daily necessities and anti-competitive behaviour among businesses.
Mr Lee was speaking yesterday at the launch of the latest food inflation figures compiled by the RPWG.
He gave further assurance that soybean and corn price hikes caused by an ongoing drought in the United States, the world's largest grain producer and exporter, will have limited effect on grain prices here.
This was primarily because Singapore sources its grain from a range of countries besides the US.
But Mr Lee warned prices for other food sources may be hoisted in the long run as soaring prices of corn - grown to make animal feed - may result in a rise in meat prices.
Food price shifts have a deep impact on household expenditure as food weighs a hefty 22 per cent in the CPI basket of goods.
This is compared with accommodation's 20 per cent and private road transport's 11.6 per cent.
Last month, the Monetary Authority of Singapore narrowed the CPI- All items inflation to 4-4.5 per cent but left unchanged core inflation and expects it to fall to 2 per cent by year-end.
Taking a snapshot of average retail prices of selected food items in Singapore, the RPWG observed that the prices of nine out of 17 food items have declined, while four remained the same and another four increased by less than 1 per cent.
The four food items which registered an increase were instant coffee, instant noodles, carrots and sugar.
Meanwhile, NTUC Fairprice and Dairy Farm Singapore pledged yesterday not to raise the prices of many of their house-brand products for the rest of the year.
Fairprice said that it would hold prices for over 500 of its house-brand items.
Those holding a Plus! Visa and NTUC Plus! Visa cards will further enjoy a 10 per cent discount while non-cardholders will recieve a 5 per cent discount on house-brand items.
Dairy Farm Singapore, which owns retail chains Cold Storage, Shop N Save and Giant, will enact a price freeze on 43 house-brand items across eight product categories.
Victor Chia, chief executive officer of Supermarket and Hypermarket at Dairy Farm Singapore, said the group would continue to uphold its commitment to moderating the cost of living.
"The price freeze is to help consumers cope better with inflation ... we've been able to pass on some savings to consumers by leveraging off our global network (of resources) and by working closely with suppliers," Mr Chia noted.