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No single measure to express 'cost of living' pressures fully: Chan Chun Sing in Parliament
COST-OF-LIVING pressures can be an expression of the gap between one’s aspirations and one’s anticipated means to fulfil them, said Minister for Trade and Industry Chan Chun Sing in Parliament on Tuesday.
“No single measure will express an individual’s ‘cost of living’ pressures fully, given the different needs and wants, the evolving aspirations and the potential gap between aspirations and anticipated means,” he noted.
Some price items, while not the biggest in absolute impact, can also have a disproportionate psychological impact on consumers, such as water and transport fares since they are consumed daily, he added. The “bunching” of price increases, such as the increases in water and electricity prices this month, can also have a disproportionate psychological impact.
He was responding to Member of Parliament Liang Eng Hwa’s question on whether the cost of living in Singapore has gone up and how the government plans to minimise the impact for low and middle-income households.
Mr Chan pointed out that there are absolute measures of cost of living, such as the Consumer Price Index (CPI) which measures how the prices of a particular basket of goods and services change over time.
Inflation, as reflected in the CPI, grew 0.6 per cent last year, lower than the average of 2.3 per cent between 2007 and 2017.
When categorised into the various household income groups, the inflation figures for 2017 was -0.1 per cent for the lowest 20 per cent, 0.5 per cent for the middle 60 per cent, and 0.8 per cent for the top 20 per cent, said Mr Chan.
For retirees, it was -0.4 per cent. But he continued: “However, if we strip out the imputed rental owner-occupied accommodation from the CPI, inflation for retiree households was 2.1 per cent last year, higher than the other household income groups.”
Mr Chan noted that inflation is a concern for retirees with no active income from work.
For this year, headline inflation is expected to remain low, ranging between 0.5 and 1 per cent.
But he warned that rising global oil prices is projected to increase fuel costs and electricity prices. Coupled with an increase in global food commodity prices, this could impact domestic food prices.
Consumer prices could also rise moderately alongside a faster pace of wage growth and pickup in domestic demand as the labour market improves, he added. However, accommodations costs are expected to decline with a sustained fall in rentals, dampening inflation.
He said: “As a small and open economy that imports most of our items, we are subject to global economic forces. Electricity and fuel costs which are influenced by global oil prices is one such example.
“The prices of certain products are also affected by our market size. Major companies determine their pricing strategies based on the purchasing power and relative bargaining power of different markets.”
Mr Chan listed Singapore’s multi-pronged approach to manage cost of living: keeping the economy competitive, managing the Singapore dollar, diversifying sources of supply, promoting competition, managing business costs, focusing help schemes, enabling consumers’ choice and leveraging social enterprises.
He concluded by stating that the government “recognises Singaporeans’ evolving aspirations for a better life” for themselves and their families, 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 Singaporeans stretch their hard-earned dollar,” he added.