i would say that govt is the cause of inflation:
Prices - A Relentless Spiral
Creeping pre-GST price hikes tighten the pockets of
Singaporeans.
By Seah Chiang Nee, littlespeck.com
Jun 16, 2007
MIDDLE class Singaporeans are being weighed down by rising costs of
daily necessities that seem to show no sign of abatement.
Hardly a week passes without a report or two of some service or
bread-and-butter item becoming more expensive and biting into
peoples fixed incomes.
The surge started with condos (one that cost S$1mil or RM2.2 a year
ago is now S$1.3mil or RM2.9) and cars, moving to the MRT, buses,
taxis, hospitals, polyclinics, mail and utilities.
The latest one hit some 750,000 households who subscribe to cable
TV. They will soon have to pay S$4 more for the Basic Package and
a whooping S$15 (up from S$5) for the sports channels that televise
English football.
This has got soccer fans hopping mad with some threatening to
cancel subscription, an unlikely solution since cable television is
a monopoly run by a single operator.
It is also the most important source of entertainment for the
Singapore family, which is embittered at the arbitrary hike and the
absence of a market alternative.
In recent weeks, inflation worsened as merchants jumped into the
bandwagon, hiking prices in restaurants, supermarkets, food courts,
coffee shops and retail outlets.
This affects the budget of every Singaporean but the hardest hit
are the middle class and lower-income workers.
To put it in perspective, not all shops everywhere are doing it and
those that do are not raising prices for every single item in their
premises.
It is a sporadic, selective practice that depends on the person and
the location. Some are reluctant to charge more for fear of losing
customers.
A stall near my home has just hiked his nasi lemak and mee rebus
from S$2 to S$2.20. Across the road, a glass of sugar cane water is
up 20 cents to S$1.20.
In some places but not all chicken rice, the closest to a
national dish here, now costs 50 cents more at S$3.50. Condensed
milk, bubble tea and Campbell soup have become dearer.
For consumers, the worst is to come. On July 1, Singaporeans will
have to pay a higher Goods and Services Tax (GST) when it is
increased from 5 to 7%.
The price increases look unstoppable and the government is either
unable or unwilling to take action to deal with it, said a retired
teacher.
In the governments view, inflation here is largely imported or due
to globalisation and represents only an insignificant rise in the
Consumer Price Index.
The only watchdog, the Consumers Association of Singapore (CASE),
has been a relative bystander especially when the perpetrator is
the government or a Temasek-linked company.
Inflation is not only a Singaporean phenomenon. It is also
threatening stronger economies like the US and China, which are
considering higher interest rates to dampen it.
With an expected growth of 6% this year, Singapore is not
spared.
But the governments strong business role and preoccupation with
the bottom line are part of the dilemma.
There are other official causes. Firstly, the authorities
themselves had started the ball rolling when they raised charges
for public services like education, hospitals and utilities.
Secondly, the government is Singapores biggest landowner, owning
some 70% of it and thus has a powerful say on prices. Rents in
Temasek-controlled commercial and shopping properties have risen
significantly.
The impact on the retail trade is inevitable.
In addition some of these linked companies operate a total or
near-monopoly services that limit market competition.
Monopolistic price increases have happened all too often, a
commentator of current affairs observed.
It is time the ministers form a committee to look into government
monopoly or cartel collusion to fix prices to ensure there is no
infringement of the Fair Trading Act.
What is more worrying is structural inflation.
As it speeds towards becoming into a global city with a large
number of rich and talented foreigners, Singapore would likely take
on a new high-cost structure.
Becoming another city like New York, Tokyo or Paris, stirs
excitement, but the cost of living is bound to take after them as
well.
The present predicament may be a sign of things to come.
Singapores economy is gradually favouring the businessman over the
ordinary worker.
Some economists think the price surge will eventually settle back
when the economy slows.
But many of the basic food prices, once raised, will not become
cheaper ever again, exclaimed a housewife. Were stuck with
them.
There is rumbling in the heartland where 85% of Singaporeans live.
The price hikes of basic goods and services are hurting many
citizens with average or low incomes.
The government is watching with some concern, although it has so
far taken little public steps to combat the snowballing
increases.
When the GST increase comes into effect next month, the Singaporean
pocket will be hit even harder. He will have to pay a 7% tax of
almost every product or service, unless an exemption is
stipulated.
The authorities are dishing out S$100-S$400 a year to each adult
over next four years to mitigate its impact. The poorer people get
the higher sum.
Apart from possible political fallout, the government will likely
want to prevent higher costs from derailing its strategy of
attracting foreign investment and talent.
Already American businessmen have complained that spiralling rents
are creating problems for them, forcing a number to relocate
elsewhere.
Cases of condo rents at choice areas rising up to by 50-70% once a
lease expires have been growing, a trend that could benefit
Singapores neighbours.
