Despite a strong Singapore dollar and falling oil prices, Singaporeans have said they have not noticed savings in areas such as food and healthcare.
While the Consumer Price Index showed an overall decrease, food inflation for November stemmed the slide, rising 2.9 per cent year-on-year and up from 2.8 per cent in the previous month.
This is despite oil prices driving down transport costs, and a strong Singapore dollar compared to regional currencies.
The Monetary Authority of Singapore (MAS) said food prices rose 0.2 per cent due to more costly non-cooked food items, and higher prices of regional food supplies and hawker meals.
F&B outlets Channel NewsAsia spoke to agreed, but cited other reasons too.
Said Mr Dilip Ghosh, owner of Urban Fairways Golf Cafe and Bar: “Essentially, the costs of food and drinks rise because I believe for our supplier, rental and manpower costs go up. So as a whole, all our costs increase.”
Rookery’s general manager, Mr Joshua Wee, said the two main cost drivers for his establishment were rent and labour. “We needed to invest in automation of some things, so that we do not have to pass back the high costs to the consumers,” he said.
Senior economist at Mizuho Bank, Mr Vishnu Varathan, said that although a strong Singapore dollar buffers against rising costs in the region, it cannot absorb the increased cost for local services in a tight labour market, among other volatile conditions.
He said: “If they are looking to see very rapid price drops in terms of food or any items they are consuming, that may not come through as quickly for three reasons. One, your labour costs may not be dropping. It may stabilise, but it may not drop as quickly, and businesses always need to build a buffer.
“Two, even if you get oil prices dropping, that may not fully offset other things such as your Causeway toll going up and hence food from across the Causeway becoming more expensive.
“Rentals also take a while to adjust, and in the meantime, hawkers may not be so willing to adjust their prices so quickly in case they get hit by a sudden increase in, say, oil prices, because certain things are volatile.”
Mr Varathan said that because of this buffering effect, the public may not feel the price drop immediately. Instead, prices are likely to continue rising in the medium term, just at a slower pace.
Source: www.channelnewsasia.com
