Families that fall under the bottom 20 per cent of income earners in Singapore have emerged as the hardest-hit by inflation over the first half of this year.
Figures from the Department of Statistics (DoS) released on Monday showed that the country’s lowest earners experienced a 6.3 per cent rise in prices over the same six-month period last year, as compared to 4.6 per cent for people living in the top 20 per cent income bracket. The remaining middle 60 per cent experienced inflation of 5.2 per cent.
The DoS attributed the faster pace of inflation for the lower-income group to higher imputed rentals on owner-occupied accommodation. Such rentals, however, do not affect the cash expenditure of the households.
Even discounting imputed rentals, though, the bottom-earning 20 per cent of households experienced a 4.1 per cent inflation rate for the first half of the year, still exceeding the 4.0 per cent inflation experienced by Singapore’s top 20 per cent income-earning households and 3.9 per cent increase in costs felt by the middle 60 per cent.
Across the board, however, rising costs in food, electricity tariffs and cars triggered the increased inflation from January till June. Lower-income households, in particular, found themselves spending more of their money on food, housing and healthcare in comparison to higher-earning households.
Commenting on the increase, Institute of Policy Studies faculty associate Tan Ern Ser explained that lower-earning households could be feeling the pinch more because of the nature of their expenses, which are likely to be mainly on basic necessities.
“(It is for this reason that) they have less leeway for cutting down (on their expenditure) or turning to cheaper substitutes,” he said.
He noted, however, that the best way to deal with inflation woes for low income-earners is still to match increments in prices with wage hikes.
Acknowledging also existing rebates that have been offered by the government to moderate the impact of rising costs, he added, “Whatever solutions we decide upon (would need to) entail our factoring in sustainability and incentives for companies to continue in business.”
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