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.”
if i don't remember wrongly some minister promised that
there will be no increase in govt fee for a year when they raised
gst from 5% to 7% in jul last year. so what happen now?