Gov’t to blame for rising cost of living?
By Seah Chiang Nee
The rising cost of living is fast becoming the second biggest concern — next to jobs and earnings — among Singaporeans, who will go to the polls this year.
Last week they received more bad news. Electricity costs will rise by 6.5 percent this month and a major oil firm will put up petrol prices at the pump.
These are the latest of a string of price increases that have been ploughing through the city heartland, often uncontrollably, and a few of them by substantial margins.
The whole thing is now like dominos going down, with one price hike leading to another.
For example, more cafes and restaurants are charging diners up to S$1 for a glass of water, and one bicycle shop in Tampines is reportedly charging cyclists 50 cents for pumping air into tyres.
In the heartland, it sometimes takes on laughable proportions, with some hawkers imposing an additional charge on customers who want a bit more sauce, ketchup or chilli.
The most damaging are big-ticket items like healthcare and homes, public transport, cars, petrol and, of course, foodstuff.
Few things — big or small — are spared for long. Sooner or later rentals will go up and vendors will charge more to make up for that.
A random look at the press showed a wide range of products and services being affected — from school bus fees to baby food, from car insurance to curry puffs.
In the past, the government had managed inflation well, keeping costs very low despite the island's dependency on the outside world for oil, commodities and food.
But in the past five years (except for the recession), inflation has made life tough for the average wage earner.
A big factor was the sharp rises in energy, commodity and food price worldwide.
Some Singaporeans attribute the rising prices to the government's "grow at all costs" strategy and its mass intake of foreigners within a short period, which strained resources.
"I think a large part of the inflation in Singapore is induced by government policy," said Leong Wai Ho, senior regional economist, Barclays Capital.
He was referring to the COE system, in which a person has to bid for a Certificate of Entitlement (with a 10-year life span) before he can buy a new car in Singapore.
Currently, the COE for a car ranges from S$40,000 to S$60,000 depending on capacity, after rising to incredible levels.
"If you take that away, inflation will be Singapore (sic) is much more manageable," Leong added.
A writer said: "The cost of living is growing, fuelled by demand from an enlarged populace for scarce resources, as well as higher government taxes and fees."
During Singapore's brief post-independence history, residents of this small island, which has few natural resources, have been conditioned to deal with the occasional price spasm.
When times were good, these could be shrugged away. This year, it appears harder to limit the damage than before.
The current crisis appears more fundamental and lasting.
In fact, it may become a structured feature in cosmopolitan Singapore.
I believe that many aspects may have been due to our ambition to become a metropolis for the rich and talented.
This means prices are no longer determined only by supply and demand.
With the world's highest increase in the proportion of millionaires, and massive foreign funds coming in, Singapore has been transformed for good.
People can forget about prices falling back to pre-inflation levels, barring a calamity.
The plague of 5 percent-5.5 percent inflation is eating into people's salaries and savings.
"I'm worried because my bank savings, which fetch only interest of 0.15%, are losing out," a housewife lamented. "When you save, you lose; don't invest, even worse."
Those who have mandatory retirement savings will be similarly affected.
Their CPF (Central Provident Fund) ordinary account pays them only 2.5 percent a year.
"With this inflation, all citizens' CPF will depreciate in value before we can even use it.
"The payout (on retirement) will probably be enough only for daily coffee expenses," a surfer said.
A chief investment officer commented: "We are likely to see increasing inflationary pressures in the quarters and years to come."
Singaporeans are particularly concerned about the possible decline of their CPF money which must follow any prolonged inflation.
The fear is very real and strong in many families.
Will the public's concern affect the election results? I believe it will, to some extent.
TODAY newspaper, which recently surveyed heartland voters on this subject, reported:
"From basic necessities to hawker meals, from holidays to that new car, from healthcare bills to expenses related to starting and raising a family, it seems that Singaporeans are certainly feeling the pinch of higher prices."
It found 40 percent of poorer Singaporeans (income from nil to S$2,000 a month) replied that the rising living costs would affect how they would vote.
Among those earning S$2,001-S$6,000, six in 10 said the issue would influence how they cast their ballot, TODAY reported.
Some older citizens, who are not benefiting from Singapore's dazzling plan to become a world-class city, are unhappy. "Give us back our older days" is their common cry.
The idea is less attractive to the younger set, which has adapted well to new technologies, although still trying hard to cope with the high prices.
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A former Reuters correspondent and newspaper editor, the writer is now a freelance columnist writing on general trends in Singapore. This post first appeared on his blog, www.littlespeck.com, on 2 April 2011.
