Prices
Up, up and up!
For wage earners, structural inflation is blurring the Singapore Dream. By Seah Chiang Nee.
May 3, 2008

HOW are Singaporeans, South-East Asia’s wealthiest people, coping with the city-state’s worst inflation in 26 years?

On the streets and in homes, skyrocketing prices are shaping up into a terrible nightmare that is eating into their income, their savings and even their confidence.

Hardly a week passes without news of one price rise or another, with each increase seemingly begetting another. And on the horizon is the prospect of a deep global recession.

For a generation, with inflation generally hovering around 2%, Singaporeans have never experienced this sort of crazy price increases.

Kindergartens run by the ruling People’s Action Party were the latest to raise fees (by 30%-100%), joining schools and universities.

Earlier, cinemas increased the price of a ticket by 50 cents and S$1, making movies a luxury item for many Singaporeans. A weekend outing for a family of four now costs between S$40 and S$43.

Singapore’s annual inflation rate was at 6.7% in March, the highest since 1982, a figure more than double that of Malaysia – and higher than those of Hong Kong and Australia.

Rice and petrol prices at the pump – as well as the cost of driving on the road – have gone up beyond recognition.

If you can name it, whether a product or a service, it’s likely that they’ve raised the price – electricity, milk, coffee and sugar down to the cost of postage.

Living in a small island, which has to import its food, oil and natural resources has put Singaporeans these days in a spot, worse than for most others.

The middle class (average monthly income: S$2,800) and the low-income are taking it on the chin. In some ways, the Singaporean Dream is being blurred.

Inflation is, however, not entirely imported. In fact, government policies have a great deal to do with it since it raised the Goods and Services Tax (GST) from 5% to 7% last July.

In quick order, it also raised the cost of services – from buses, MRT and taxis to hospitals and schools.

Drivers are now charged more often and more regularly when they drive on certain road at peak hours.

The ill-timed GST increase was the trigger point, but it wasn’t the main reason.

The two biggest factors that pushed up inflation are:

* A strong overheating economy that grew by 7% annually for the past four years; and,

* An open door immigration (the highest inflow rate in the world) that brought in a million foreigners and pushed the population to about 4.7 million.

The republic is paying a high price for becoming a global city of fine living comparable to the likes of Paris, New York or Tokyo.

It has created something more than high inflation: A permanent high-cost structure – from property to taxi fares and restaurants.

To be a London or a Brussels would mean having to live with their high costs.

People are responding in different ways. I know of several young graduates who have just started working, moving back to live with their parents to save on expenses.

Mr and Mrs Singapore are going out or eating out less, buying fewer luxuries, including cars, and reducing the use of taxis. There are social costs to all these.

“My wife and I no longer go out very often on weekends. Every time we do so, we feel the pinch,” said a young salesman who had just got married. “Having children? Not now. We can hardly feed ourselves.”

Nine in 10 people polled by the Sunday Times now find Singapore an expensive place to live in.

While eating at a food court recently, I sat next to a couple in their 20s sharing a lunch – a plate of mee goreng (fried noodle) and one bottle of orange squash.

On another time, I saw a Bangladesh worker lunching with just a can of black coffee and a large loaf of plain bread.

For some like Janice Tan, 35, who works at a travel agency, the soaring prices have forced members of her family to shower only once a day to cut down their water bill.

She told a reporter that water (which is also dearer) used to rinse vegetables is also now recycled to flush the toilet.

“Except for the ultra-rich, the impact of the sharp price increases has cut across social classes in one of Asia’s wealthiest nations,” wrote a foreign correspondent.

Charities are offering free food to the needy – a page from America’s soup kitchens – and the queues are getting longer. More people are also approaching community bodies for help to make ends meet.

A government website is listing food stalls that offer S$2 meals. The most popular dish that I know of: Vegetable economical mee hoon at S$1.60).

The government has just dished out cash averaging S$1,000-S$2,000 (as well as top-ups in mandatory savings) to each family, depending on its size, age and poverty level.

The complaints are loudest from the middle class, with some people questioning whether Singapore is still a good place to live in.

Inflation has made them worried about savings, family life and old age.

Aret says “it’s not a place for dreamers”. Another added that after 10 years of struggling, “I am very tired and stressed”.

But others are more optimistic, believing the problems are largely global, and as the world picks itself up, so will Singapore.

To those who say Singapore is not a good place to live in, he said: “If it is so, then nowhere else is a good place.”

(This was published in The Star, Malaysia on May 3, 2008)