Singapore’s Inflation Remained Steady At 6.7% In November (And Why Things Will Still Be Expensive Even If Inflation Stops Rising)
After months of prices increases, we are finally seeing some signs of relief. MAS Core Inflation only rose 0.2% between October 2022 and November 2022, while CPI-All Items inflation rose only 1.0% in the same period. Inflation in November remained unchanged from October, coming in at 5.1% on a year-on-year basis (y-o-y) for MAS Core Inflation and 6.7% y-o-y for CPI-All Items inflation.
Yet is it really time for us to celebrate and does this really signal relief for our pockets from rising prices?
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Absolute Prices Can Remain High Even If Inflation Stops Rising
While it may be good news that inflation has held steady in November, we are likely to still see higher prices on the market.
Even if inflation stops rising (i.e., 0% increase), prices would have increased from months of prior increases. For example, your kopi was $1.20 in January 2022. The coffeeshop decides to increase its price to $1.40 in October 2022. The price remains the same in November 2022. The inflation rate would be 16.7% on a month-on-month basis (m-o-m) in October, but 0% (m-o-m) in November.
November 2021 | January 2022 | October 2022 | November 2022 | |
Price of Kopi | $1.20 | $1.20 | $1.40 | $1.40 |
Inflation rate | – | 0% | 16.7% (m-o-m) | 0% (m-o-m) |
As time passes, the higher prices will become normalised and no longer reflected in the year-on-year inflation rate. Therefore, tracking inflation information is important as price changes are usually too gradual to be noticed. 2022 is a significant year for inflation because the price increases can be felt by the average consumer even on a monthly basis.
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Different Goods And Services Respond Differently To Cost Changes
As consumers, it is better for us to monitor inflation on a yearly basis, instead of monthly basis as most goods and services tend to have “sticky” prices. Once they increase in price, it is hard for to come back down. One example is hawker food prices. Many hawkers tend not to change their prices and preferring to absorb seasonal prices fluctuations or discontinuing certain menu items if the cost prices are too high. However, in periods of sustained cost increases, hawker food prices will increase and once they increase, these high prices will account for not just the temporary price increases, but also other underlying cost increases that the hawker has been absorbing over time.
In contrast, prices of some goods and services fluctuate frequently and are very responsive to supply changes. For example, we can see the direct impact of rising oil prices on our monthly electricity and petrol bills.
Read Also: Factors That Impact Electricity Prices In Singapore, And What Can We Do About It?
Most Goods And Services Have Increased In Prices Despite The Lower Inflation
Source: Singstat
Aside from communications which actually showed deflation, all other consumer categories are more expensive than one year ago or when compared to the start of the year. In particular, transport, housing & utilities and food have shown the highest increase.
Hawker Food Has Become More Expensive
In general, food and eating out has become more expensive. Singapore’s favourite hawker food is no exception. Most hawker items had no price changes between October and November 2022. However, hawker food prices have increased about 8% in general, compared to November last year.
For example, chicken rice has increased from $3.57 (Nov 2021) to $4.06 (Nov 2022).
Price in Nov 2021 | Price in Nov 2022 | Change (%) | |
Fishball Noodle (Per Bowl) | 3.59 | 3.90 | 8.6% |
Mee Rebus (Per Bowl) | 3.33 | 3.63 | 9.0% |
Chicken Rice (Per Plate) | 3.57 | 4.06 | 13.7% |
Chicken Nasi Briyani (Per Plate) | 5.92 | 6.40 | 8.1% |
Economical Rice (1 Meat & 2 Vegetables) (Per Plate) | 3.42 | 3.73 | 9.1% |
Roti Prata (Plain) (Per Piece) | 1.12 | 1.24 | 10.7% |
Fried Carrot Cake (Per Plate) | 3.16 | 3.42 | 8.2% |
Ice Kachang (Per Bowl) | 2.15 | 2.33 | 8.4% |
Transport (And Fuel) Has Become More Expensive
Drivers and commuters alike are feeling the pinch from increased transport prices. Not only are cars (and COEs) more expensive, fuel has also driven up the cost of transportation.
Despite little changes from October, the prices for fuel have increased significantly from last year, almost 17% compared to last year.
Price in Nov 2021 | Price in Nov 2022 | Change (%) | |
Diesel (Per Litre) | 1.96 | 2.53 | 29.1% |
Petrol, 98 Octane (Per Litre) | 2.97 | 3.14 | 5.7% |
Petrol, 95 Octane (Per Litre) | 2.46 | 2.63 | 6.9% |
Petrol, 92 Octane (Per Litre) | 2.42 | 2.58 | 6.6% |
Accommodation And Utilities Are More Expensive
With housing prices at an all-time high, accommodation prices have increased. The cost of living in an accommodation has also increased with increases to utilities and other household fuels.
According to the Consumer Price Index monthly numbers, housing & utilities have increased by almost 6% compared to last year.
CPI in Nov 2021 | CPI in Nov 2022 | Change (%) | |
Housing & Utilities | 103.220 | 109.028 | 5.81 |
Accommodation | 103.740 | 108.770 | 5.03 |
Utilities & Other Fuels | 99.236 | 111.007 | 11.77 |
Water Supply | 100.000 | 100.000 | 0.000 |
Refuse Collection | 100.000 | 116.729 | 16.73 |
Electricity | 97.777 | 115.994 | 18.22 |
Gas | 104.628 | 112.012 | 7.38 |
While inflation has increased, the consolation is that the government is giving more support to households through cash payouts and CDC vouchers. Additionally, the average wages have also increased which will mitigate the increased cost of living.
Hopefully, with consecutive months of inflation remaining steady, the overall inflationary environment will ease further.
Read Also Coping With Inflation In Singapore: What Can MAS Do (And At What Cost)?
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