Inflation hit three-year high of 5.2% last year
Well-off bear biggest brunt of the price increases, figures show
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Inflation surged to a three-year high of 5.2 per cent last year, driven by the higher costs of owning a car and steep rents.
But not all income groups felt the effects uniformly, with the well-off feeling the brunt of rising prices more, the Department of Statistics (DOS) said on Wednesday. Last year, the top 20 per cent of income earners were hit by an inflation rate of 5.7 per cent - much higher than the 4.7 per cent for the bottom 20 per cent of households.
But the difference is far sharper if the cost of renting a home is stripped out. More than 87 per cent of Singaporeans owned their homes in 2010 and do not pay rent. Minus the cost of rentals, the lowest 20 per cent of households had inflation of just 2.2 per cent, less than half the rate experienced by the top 20 per cent.
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Background story
New gauge takes out accommodation cost
A NEW indicator that throws more light on the level of inflation was unveiled by the Department of Statistics (DOS) yesterday.
The number strips out imputed rents on owner-occupied accommodation (OOA) from the overall consumer price index (CPI) compilation.
Imputed rent is typically calculated to reflect how much a household would have to pay if it were renting the home, based on market rates.
It is the only non-cash item in the basket of data used to compile the CPI, so by stripping it out, the index can more accurately reflect households' actual expenditure.
As of 2010, around 87.2 per cent of households own their homes and therefore do not need to pay rent.
The DOS said in a statement yesterday that the 'changes in the CPI-imputed rentals on OOA... have no direct impact on the monthly cash expenditure of most households in Singapore'.
This latest indicator - CPI less imputed rentals on owner-occupied accommodation - was 4.3 per cent higher last month compared with the same month a year before that.
The DOS also compiles the overall, or headline, inflation figure. The figure for last month was 5.5 per cent.
Apart from this headline figure, the DOS calculates a CPI figure excluding accommodation costs. That means it excludes the non-cash item - imputed rentals - as well as other items such as maintenance fees, which are paid out in cash.
Accommodation cost was the single largest driver of headline inflation last month.
The Monetary Authority of Singapore and the Ministry of Trade and Industry said in a joint report that the increase in accommodation cost 'reflected the sharp rise in imputed rentals on owner-occupied accommodation'.
Compiling an indicator for CPI less accommodation helps to strip out volatility.
This volatility arises due to the rebates for service and conservancy charges that are given to households living in HDB flats, at different times of the year.
The Monetary Authority of Singapore also compiles a core, or underlying, inflation number that strips out accommodation and private road transport. The core inflation stood at 2.2 per cent for the year.
For the whole of last year, the rise in CPI less imputed rentals on owner-occupied accommodation was 4.2 per cent. The overall CPI was 5.2 per cent.
MELISSA TAN
Analysts also noted that if it is assumed that the less well-off do not own a car, then they will also be relatively less affected by headline inflation.
