Budget 2025 Offers Welcome Relief, But We Need to Address Long-Term Insecurities

We need to tackle root causes of cost volatility and ensure our workers are skilled enough to find well-paying jobs.

- Selena Ling

In a turbulent global environment, Singapore's Budget 2025 took a decisive stance by focusing on individual financial support measures aimed at bolstering household resilience.

The fiscal package, unveiled amid concerns of unpredictable inflation trajectories due to trade tensions and geopolitical unrest, seeks to cushion households from rising living costs while laying the groundwork for long-term economic stability.

Given persistent cost of living concerns, it is certainly timely to provide the additional support that may be needed to truly safeguard households in a world divided by economic and trade barriers.

The worst of inflation is likely over. Headline inflation halved from 4.8 per cent year on year in 2023 to 2.4 per cent in 2024, and core inflation also eased from 4.2 per cent to 2.7 per cent over the same period. That said, the lowest income quintile of households still experience relatively higher inflation compared with the middle or highest quintile of households.

That is because these households spend the bulk of their income on essential items, and it is worth noting that the biggest contributors to inflation remain as follows: accommodation, food, hospital and outpatient bills, bus and train fares, and point-to-point transport services—which account for nearly 53 per cent of the consumer price index basket of goods and services consumed by the average Singaporean.

But while lower-income Singaporeans may bear the inflation brunt relatively more, this does not take into account the significant fiscal transfers they also enjoy.

This is where immediate relief through direct financial support plays a key role in Budget 2025. At its heart is a robust set of direct financial support measures designed to ease the immediate cost-of-living pressures on Singaporean households.