Illusion of payrise
High inflation Major cause: Restructuring Strong currency cannot offset domestic pressures on prices. DBS analysis. Oct 8, 2007 Singapore exchange rate policy struggles with inflation Commentary by DBS Group Research (source: The Edge daily) SINGAPORE’s CPI inflation hit a 12-year high of 2.6% year on year (y-o-y) in July. While this was partially due to a two percentage point hike in the GST in July, some structural changes in the economy are also at play. Apart from imported inflation, which can be addressed with the exchange rate policy, much of the current inflationary pressure stems from domestic sources. Plainly, exchange rate policy is not very effective in dealing with domestically driven inflation. Policymakers will need to utilise non-monetary policies to complement the exchange rate policy if inflation is to be kept in check. The above is part of an article posted in littlespeck.com. What is actually affecting the people today is that their income is shrinking. Yes, they are getting a huge pay cut without knowing it. And to maintain their same purchasing power, a huge pay rise is necessary just to go back to square on. The illusion of huge pay rise is as good as watching David Copperfield and his magic show. It is all an illusion. There is no pay rise for those who got a pay rise, except those who got a very substantial payrise. Those who got little or no payrise is getting a paycut.