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Inflation data for different Singapore demographic groups could be in the works
IN THE not-so-distant future, Singapore could be unveiling inflation data to track price changes for various demographic groups such as retiree households or families with school-going children, instead of just looking at household income.
In Parliament on Tuesday, Minister for Trade and Industry (MTI) Chan Chun Sing said the ministry has been using various ways to look at inflation data differently.
The ministry is "particularly concerned" about retirees, and hence has been monitoring data on this segment over the past five years, he said.
"But it takes some time to build up [findings categorised] by different demographic groups. We will make data available when we have it," he said.
The minister was responding to a supplementary question by Non-Constituency Member of Parliament Leon Perera, who had asked whether the MTI would consider publishing inflation data based on demographics.
Currently, Singapore releases inflation data through the consumer price index (CPI) based on household income twice a year. The CPI measures the price changes in a weighted basket of goods and services commonly purchased by households over time.
When price changes are tracked for the various demographic groups instead, the items and weights of the items in that basket would vary according to needs of that particular group; the picture presented by the various profiles will enable policy makers to better gauge the biggest cost pressures for each group, and how quickly they are rising.
Economists that The Business Times spoke to were intrigued by the notion of tracking price changes - or rate of inflation - for various demographic profiles, describing it as an unusual move.
UOB economist Francis Tan said: "In my years of looking at inflation data across countries, I have never heard of other countries doing such a thing. This is very interesting to me."
But he welcomes the development: "To me, more data is better than no data. It's a good move if the government releases more information based on profiles, especially in the age of big data."
While economists think that there are many benefits to be reaped, they caution about the challenges involved.
For the data to be useful, Mr Tan said that there must be transparency over the items in the baskets and weights attached for the different groups.
Mizuho economist Vishnu Varathan said: "How they define demographic profiles themselves will be very contentious… Retiree households are an easy category to demarcate, but the rest are more debatable.
"It will add a lot more value, but it could also add a lot more noise as we look at who we should prioritise."
But he maintains that it is a good complement to the current inflation data based on household incomes and it is not meant to replace it.
For example, retiree households can come from a whole spectrum in terms of wealth, so it still needs to be augmented further with income profiles, he argued.
In Parliament on Tuesday, Mr Chan revealed inflation data based on retiree households, defined as those comprising solely non-working persons aged 60 and over.
When imputed rental for owner-occupied accommodation is stripped out, inflation for retiree households stood at 2.1 per cent last year. (see clarification note) This is higher than the 1.7 per cent seen in general households.
He noted that inflation is of particular concern for retirees with no active income from work.
In response to a query from BT, the MTI elaborated that healthcare costs for retiree households rose at a faster pace last year largely because of the "scheduled scale-back in transitional subsidies provided for MediShield Life premiums".
Despite the emphasis on retiree households and those in the low-income group, Mr Chan emphasised that the government recognises that cost-of-living issues affect the "entire spectrum of families in Singapore".
He acknowledged Singaporeans' "evolving aspirations for a better life", and the "associated stress of achieving real-income growth in a volatile economic environment".
"Beyond creating opportunities for Singaporeans to enjoy real wage growth to meet their aspirations, the government is also committed to help them stretch their hard-earned dollar," he added.
In an earlier version of the article, it was mentioned that when accommodation cost is stripped out, inflation for retiree households was 2.1 per cent. It should be when imputed rental for owner-occupied accommodation is stripped out instead.