You struggle to keep going but the incline is sharp and you worry your stash of food and water is running low.

You wish you knew when you would reach the top, so you could stop to catch your breath.

But no one seems able to tell you just how high this mountain rises.

So it is with economists today and the prices of food and oil.

No one knows for sure how high these two are set to soar, and that is what makes predicting future inflation rates a challenge.

Oil and food prices, Deutsche Bank's chief Asian strategist Chua Hak Bin tells Insight, 'remain the wild card'.

Nanyang Technological University economist Chew Soon Beng observes that the prices of these two essentials have become highly sensitive to bad news - whether storms or strikes or any other event that can disrupt supply.

'When the prices of oil and food go up, the poor suffer,' he says.

Ordinary Singaporeans have little choice but to spend more on food. But with the economy still growing steadily, most will enjoy wage increases that will help them cope with rising prices.

Last year, for instance, average wages rose by about 8 per cent while the inflation rate was 2.1 per cent.

This year, the Government expectsinflation to be at the upper end of its forecast of 4.5 per cent to 5.5 per cent.

A key question is whether wage increases will keep pace with the price rises as the gross domestic product (GDP) growth is expected to moderate from last year's 7.5 per cent to between 4 per cent and 6 per cent.

Low-skilled workers already feel squeezed, veteran unionist Thomas Thomas says, because they are also hit by the ongoing trend of companies cheap- sourcing, that is going for the cheapest labour regardless of quality.

'With cheap-sourcing, the average guy's pay in some sectors has fallen and that's just as bad as inflation,' he says.

Retirees living on a fixed amount of savings are also hit hard, because $10 today buys less than it did a year ago.

Those too old or sick to work for extra income have to turn to grassroots and community groups for help.

A recent Straits Times check with 10 citizens consultative committees(CCCs), which manage ComCare funds at the ground level, found that appeals for help went up at nine of them in the last few months.

Since the mid-1980s, Singaporeans have grown used to prices in general rising at a very comfortable pace of between 1 per cent and 2 per cent a year.

That is apart from three years in the 1990s when inflation hit 3 per cent.

Unsurprisingly, the shift into higher gear has come as a shock to people's systems.

The current situation is due to not one, not two, but a whole gamut of factors combining to push prices in general upwards.

That is what inflation is: a rise in the general level of prices for goods and services, ranging from food and transport to housing, health care, education and leisure.

Both domestic and global factors feed inflation, but the first is more within the Government's control than the second.

Policy changes that raised the goods and services tax(GST) and Electronic Road Pricing rates, for example, have pushed up inflation.

But these are one-off increases, so their impact on prices will tail off.

Take last July's hike in GST - it is expected to wear off by this July.

Local demand for labour and office space is also weakening with growing uncertainty in the global economic outlook.

As a result, housing, commercial and retail rents have stabilised and may fall slightly, Dr Chua says.

'Wage increases will probably be modest this year as some companies turn more cautious,' he adds.

So domestic upward pressure on prices seems to be easing, but not global inflation, which remains a worry - a big one.

Demand for food and oil will continue to rise as millions in China and India enjoy higher incomes and consume more of both.

Food supply simply cannot keep up because of disruptions owing to bad weather and disease outbreaks.

In place of food, large swathes of agricultural land are now producing crops for biofuels.

In the meantime, oil supply remains limited as Opec cartel members stick to their quotas while non-Opec countries are slow to raise output.

Investors further push up commodity prices when they buy up everything from coffee to copper to crude oil as a hedge against, ironically, further price hikes.

So, when will prices stop spiralling up?

No one knows for sure.

But the Monetary Authority of Singapore (MAS) has assessed that in the next few years, inflation will be a risk around the world, Finance Minister Tharman Shanmugaratnam said last month.

'And if it's a risk all round the world, we have to be on guard as well,' he added.

That is why the MAS has allowed the Singapore dollar to appreciate against a trade-weighted basket of currencies.

Such a move helps to curb price increases for those goods that Singapore imports.

But neither the MAS nor the Ministry of Trade and Industry has given any indication of the likely inflation rate for next year.

Their holding back underscores the unpredictability of commodity price movements in the current climate.

Private-sector economists have their working estimates, though.

Dr Chua is optimistic that Singapore's inflation will fall to around 3 per cent next year.

OCBC Bank economist Selena Ling's forecast is 4 per cent.

Whatever the case, 'it is unlikely to return to the good old days of 1 per cent to 2 per cent any time soon', she tells Insight.

Veteran economist Lee Soo Ann, now a senior fellow at the National University of Singapore, agrees.

He notes that the global money supply has increased because the Federal Reserve has injected a massive amount of dollars in a bid to fend off a financial crisis in the United States.

'This stimulus to global money supply will take time to work itself through,' he tells Insight.

In his May Day address this week, Prime Minister Lee Hsien Loong acknowledged the rising cost of living is a major issue.

He said Singapore cannot insulate itself completely from worldwide price increases but the strong Singapore dollar has moderated the impact of imported inflation.

'At the same time, we can and will directly assist those who are adversely affected by the higher cost of living,' he said.

The amount of government help this year to low-income families, in such forms as the Workfare Income Supplement, GST offsets and Growth Dividends, is 'far larger than the increase in their cost of living due to higher inflation', he added.

Professor Chew of NTU agrees that in the face of global price hikes, there is not much else Singapore can do.

'When the weather is bad, you have to wait it out,' he says.

lydia@sph.com.sg

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