Sunday, 13 May 2012

Heartland Heartache

I have just read a very interesting and informative article by Louis Lee on the cost of living in Singapore. Even in our years in Singapore the price of basic hawker food was on the rise so it is not too much of a surprise to see that the price of a simple bowl of noodles is now $5 and expected to rise to $7 a decade from now.

The concern, as the writer points out, is just how affordable living in Singapore has become for its own citizens.

They are not alone in experiencing this global phenomenon in the current economic climate but Singapore is not a welfare state and so any cost of living associated with the basics of food, housing and transport hits its Heartland hard.

The above chart shows the change in Singapore's CPI (Consumer Price Index-All Items Inflation) in the past 12 months.

Moving from right to left it is easy to see that most of the basics have risen significantly with the transport figure reflecting the government's rise in COE (Cost Of Entitlement) which gives one the right to purchase a vehicle; not the actual purchase price of the vehicle itself.

Another significant contributing factor is the cost of public housing.  The HDB's own Retail Price Index chart (below) outlines a significant jump in price from the beginning of 2007; a rise that shows little sign of declining.
Source: HDB
There is no quick fix to curb these rises in CPI, especially in with the global winds of economic uncertainty swirling around as they are at present.  Singapore's reliance on trade, energy sources and it relatively small size make it extremely susceptible to the vagaries of global trends. While the government does its best to offset these factors, life for the average Singaporean is not getting easier faced with a trend of rising prices across the board.

It should be noted that this situation is not unique to Singapore; others are facing similar challenges.

If you look at a similar time span to the HDB chart above for the New Zealand CPI (from the 1st quarter of 1994 to the present) the real purchasing power for New Zealanders has declined some 33%. i.e. a 49.3 percentage change.

Australia's CPI from March 2008 to March 2012, month on month, also rose more than 10%

For those on fixed or low income such rises are bad news, whichever country one lives in.
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