Cheaper electricity for all income groups in 2020, but food prices and transport fares higher

Inflation dipped by 0.1 per cent for both the lowest 20 per cent and middle 60 per cent of household income groups.
Inflation dipped by 0.1 per cent for both the lowest 20 per cent and middle 60 per cent of household income groups.ST PHOTO: LIM YAOHUI

SINGAPORE - All household income groups enjoyed cheaper electricity, petrol, outpatient services and clothing and footwear last year, outweighing the higher prices for food, bus and train fares.

Overall inflation declined by 0.2 per cent last year, a reversal from the 0.6 per cent increase in 2019, data released on Monday (Jan 25) by the Department of Statistics (Singstat) showed.

Inflation dipped by 0.1 per cent for both the lowest 20 per cent and middle 60 per cent of household income groups.

It fell by a slightly larger 0.2 per cent for the highest 20 per cent income group.

If imputed rents on owner-occupied accommodation are excluded, inflation fell by 0.3 for each income group.

But Singstat noted that although the contributors to the change in consumer prices were broadly the same across the three groups, they affected each group of earners in varying degrees.

For instance, the fall in electricity and outpatient services costs had a larger dampening effect on the consumer price index (CPI) of the lowest 20 per cent income group.

"This was because the latter saw a larger decline in the costs of these items, and the items also accounted for a higher share of their expenditure basket," Singstat said.

On the other hand, the declining prices of petrol and clothing and footwear had a greater effect in easing the CPIs of the middle 60 per cent and highest 20 per cent income groups because they accounted for a larger share of their expenditure.

Meanwhile, the increase in bus and train fares and food prices had a smaller impact on the CPI of the highest 20 per cent income group as they accounted for a lower share of the group's total spending.

Specifically in the second half of last year, overall inflation fell more for the lowest income group, by 0.2 per cent. It fell at 0.1 per cent for the middle and highest income groups.

Singstat noted that the cost of outpatient services declined faster for the lowest income households due to the higher subsidies provided for this group.

Their electricity costs also fell more steeply than for the other income groups because of the rebates given by electricity retailers to those living in one and two room housing board (HDB) flats, Singstat said.

The increase in car prices also had a smaller impact on them as cars had a smaller expenditure weight for this group.