Costlier raw materials driving up hawker food prices: Study

A $500 increase in the monthly cost of raw materials leads hawkers to raise prices by 20 cents on average, while the same increase in rent lifts prices by only five cents, says the Ministry of the Environment and Water Resources.
A $500 increase in the monthly cost of raw materials leads hawkers to raise prices by 20 cents on average, while the same increase in rent lifts prices by only five cents, says the Ministry of the Environment and Water Resources.ST FILE PHOTO

THE higher price of raw materials, not labour and rent, is the main factor driving up food prices at hawker centres, according to a new study out yesterday.

It noted that a $500 increase in the monthly cost of raw materials - items such as meat and sugar - leads hawkers to raise prices by 20 cents on average, while the same increase in rent lifts prices by only five cents, said the Ministry of Trade and Industry and the National Environment Agency, which conducted the study.

In fact, most hawkers who raised prices between July 2012 and April last year had not experienced rental changes, it added.

The survey also found that hawkers in the Central Business District tend to pass on more of their higher rents to customers as they can take advantage of the relative lack of competition.

There are about 6,000 cooked food stalls in hawker centres across Singapore, managed by the National Environment Agency. Half the stalls enjoy rental subsidies and pay an average of $200 a month. The average rent for a non-subsidised stall is $1,250.

Hawker centres differ from coffee shops, which are managed by the Housing Board. About 40 per cent of the board's 714 coffee shops are leased to a master tenant, who then sublets individual units.

Monthly rent for a four-unit coffee shop can range from $20,000 to $50,000, depending on location, said Mr Thomas Foo, chairman of the Kheng Keow Coffee Merchants Restaurant and Bar Owners Association.

Raw materials are the biggest cost component of most hawker stalls, accounting for about 59 per cent of total expenses, according to a poll of 1,000 hawkers selling five types of foodin 2012 and 2013. Labour accounts for 17 per cent of costs, and rent makes up 12 per cent. As prices of raw materials rise and employers remain stuck in a labour crunch, cost pressures could help explain rising food prices.

Food inflation has consistently come in above headline inflation in recent months. Food prices rose 2.1 per cent last month from the same month a year ago, although consumer prices as a whole fell 0.5 per cent. Hawker food inflation was also at 2.1 per cent last month.