Inflation hits top earners hardest
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Inflation hits top earners hardestby Ryan Huang Wenwu Updated 06:02 PM Jul 26, 2011
SINGAPORE - Singapore's inflation rate last month - driven by higher housing, transport and food costs - hit 5.2 per cent compared to a year ago - the highest level in five months since it peaked at 5.5 per cent in January.
However, data released yesterday showed that the pinch of higher prices was not felt uniformly across all income groups.
According to figures released by the Department of Statistics (DOS), in the first six months of the year, the consumer price index (CPI) for general households rose 5.0 per cent from last year. However, the top 20 per cent of earners in Singapore felt the higher prices more acutely, facing an inflation rate of 5.6 per cent.
This was due to significant price increases for cars and petrol, which have relatively larger weights for this group.
In contrast, those among the lowest 20 per cent of income earners grappled with an inflation rate of 3.9 per cent, while the middle 60 per cent of income-earners saw inflation of 4.7 per cent.
According to the DOS, all three groups were affected by higher car prices, accommodation costs and more expensive food. These increases were, however, moderated - particularly for lower income-earners - by the Government's scrapping of television and radio licence fees and lower service and conservancy charges.
Against this backdrop and with an eye on higher inflation in the months ahead, the Monetary Authority of Singapore (MAS) last week raised its official inflation forecast for the full year to between 4 and 5 per cent.
Analysts MediaCorp spoke to did not expect headline inflation to moderate until at least the end of the year.
"They are going to be (on) the firmer side of 4.5 per cent or perhaps even 5 per cent for a couple of months," said Mr Vishnu Varathan, Asia economist at Capital Economics. "This is primarily driven by higher housing as well as transport costs."
Experts also noted that, although low income-earners faced the lowest inflation rates, this was still significant for them due to their low earnings base.
Higher accommodation costs and electricity tariffs drove up housing cost last month by 8.8 per cent from last year, while food items last month cost 3.1 per cent more than a year ago.
The cost of transport increased 10.4 per cent, arising from higher prices of cars and petrol, with the higher car prices partially reflecting the lower base effect as car prices dropped in June last year over May last year.
Excluding accommodation costs, the CPI rose 4.0 per cent in June from last year.
On a year-on-year basis, the MAS core inflation measure - which excludes the costs of accommodation and private road transport - was 2.3 per cent.
While the MAS said last week that monetary tightening has helped dampen cost increases, with the strong Singapore dollar helping to filter cost increases and restrain growth, higher uncertainties in the global economy could scale back the pace of tightening.
The Singapore dollar strengthened to yet another record high of S$1.2064 versus the US dollar late yesterday, compared to S$1.2080 on Friday.
Noting inflation has remained high in the region as well, DBS senior economist Irvin Seah felt monetary tightening was shifting to a lower gear and central banks were beginning to be more cautious.
"So most of the central banks, although we still expect them to continue to hike interest rates ... I think the pace of increase in policy rates are likely to be slower going forward," he said.http://www.todayonline.com/Singapore/EDC110726-0000080/Inflation-hits-top-earners-hardest
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The writer talking rubbish, no common sense from Pap controlled media.
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State control media is like that. Rich people have lots of wealth. I think inflation hurts lower income people most.
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dont understand the purpose of such a news report.
are the rich ever concerned about inflation?
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rich wants to be richer... agree?
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Originally posted by Ubaerusl:
rich wants to be richer... agree?
You are right! Good example, LKY and gang.
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really?
so you saying poor people have free food and these?
or some special treatment by the goverment?
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Funny, rich ppl inflation also lesser impact on them. Poor people or middle income ppl might suffer though.
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i think we need some FT to replace those stupid ppl in DOS right?
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Maybe next time we have a new citizen PM.