But Singaporeans themselves will, at the same time, have to make adjustments, he said. One suggestion: Go for cheaper house brands.

'We can overcome this problem, by working together. People making adjustments, the Government doing its part. We must stay together even during difficult periods,' said Mr Lee.

Speaking to 1,400 residents and grassroots leaders at a Chinese New Year dinner at his Teck Ghee constituency he however rejected calls for the Government to control the price of essential goods.

'Residents asked, why can't the Government just control the prices?' he recounted.

His response: Singapore was an open economy and imports all its food.

'We can't just order wholesalers and retailers to fix or reduce prices. They have to pay the overseas suppliers - who will bear the loss?'

If the Government subsidises essentials, it will be 'very expensive, and also ineffective'.

As higher-income households spend more, such subsidies will benefit them more than the poor. It is better to use the money instead to help the needy more directly, he said.

Read the full report in Monday's edition of The Straits Times.