ALTHOUGH they have risen steadily over the past six years, Chinese New Year (CNY) food prices have fallen considerably this year - at least according to The Business Times Fa Cai Index, which tracks the average price of an equally weighted basket of four popular festive food items, namely mandarin oranges, beer, abalone and bak kwa, in the weeks before the festival.
The food items were chosen based on price availability and the ability to make year-on-year comparisons.
The basket is considerably cheaper this year, with prices falling 8 per cent year on year. This is in sharp contrast with last year's 1.29 per cent increase, as well as the steeper 4.32 per cent increase in the year before.
This year, prices of all four goods have fallen, with the largest declines seen in abalone, followed by mandarin oranges. Abalone prices have on average fallen a staggering 18.6 per cent, while mandarin orange prices were down by almost 10 per cent.
Meanwhile, less dramatic price declines were seen for bak kwa (a 5.3 per cent drop), and for beer (a 1.4 per cent fall).
The downturn in prices could be attributed to "more cautious sentiment from businesses and households", said OCBC economist Selena Ling.
"The headline Consumer Price Index (CPI) is likely to stay negative at least for the first half of 2016, if not for the full year," Ms Ling added, when asked if the downturn in prices could mean a deflationary outlook for Singapore's economy.
The index measures headline inflation by calculating the cost to purchase a fixed basket of goods.
Meanwhile, major supermarkets partly attributed the drop in prices to good harvests.
"For Lukan mandarin oranges, the fall in prices is due to a good harvest this year," a FairPrice spokesman told BT, adding that some of the other varieties of the fruit have had a good harvest this year as well.
This view was similarly echoed by the other retailers. "As for mandarin oranges, Giant brought in more volume, in addition to working closely with our suppliers to lock in orders and prices very much earlier, thus savings could be passed on to our consumers," a Giant spokesman told BT.
For beer, many retailers like Sheng Siong, FairPrice and Giant offered promotional prices on Tiger beer during the two weeks prior to CNY.
When asked about the reason behind the fall in beer prices, the Giant spokesman said that it is due to the close relationship that the supermarket shares with its suppliers. This is so that they can offer their customers "the best in price and quality". The supermarket chain has a reputation for low prices and no-frills service.
However, aside from the occasional good harvest and retailers' efforts to push for lower prices from their suppliers, this year's index drop was driven mostly by a steep fall in abalone prices.
For example, New Moon's Australian abalone prices have fallen by almost S$10 per 425g can on average, compared with 2014. "This is due to the dual effect of a weak Australian dollar and an abundant supply of abalone (good harvest)," explained a Sheng Siong spokesman.
The Giant spokesman also confirmed this, saying: "Retail prices (for New Moon's abalone) have indeed dropped by 10 to 15 per cent at Giant. This is because the costs from our suppliers have gone down as well."
However, the spokesman also added that "generally, the uncertainty in the economy definitely has had some impact on the costs of these items".