Low-income households burdened by high food inflation

In spite of negative headline inflation.

Food inflation remained steady at 2.9% although Singapore’s headline inflation has been in the red in both November and December.

According to ANZ-Roy Morgan, families in the lowest income quintile have been hard hit by high food inflation, while high-income households have benefited from the sharp decline in car prices.

“Moreover, we continue to find evidence that the burdens of supply-side restructuring and the current economic circumstance are being disproportionately distributed. The lowest income quintile has been confronted with higher inflation in the second half of last year given they devote a larger share of expenditure on food whereas the higher income quartiles who spend more on cars have benefited from  steep price drops in autos,” stated Glenn Maguire, ANZ Chief Economist South Asia, ASEAN & Pacific.

He added that in spite of falling oil prices, these financial dynamics have not been sufficient to alter longer term assessments of the Singaporean economy, which remains challenged by the retarding influence of restructuring.

“Fewer Singaporeans are confident on the twelve month and five-year outlook with only 44% of Singaporeans expecting Singapore to have good times financially over the next five years. Despite the impressive fall in oil prices, the number of Singaporeans who believe Singapore will have “bad times” economically over the next twelve months rose 4ppts to 15% in January – the highest level ever recorded for this indicator,” he added.