Inflation rose the most for high-income group in first half of 2022

The cost of cars, petrol and other transport services had a larger impact on the spending of this group of top earners. ST PHOTO: NG SOR LUAN

SINGAPORE - The highest-income group in Singapore saw the largest increase in consumer prices in the first half of 2022, compared to other income groups.

Those whose household incomes were in the highest 20 per cent bracket saw a 6 per cent year-on-year increase in consumer price index (CPI) for all items during the period, according to data released by the Department of Statistics (SingStat) on Monday (July 25).
This is higher than the 4.2 per cent rise in CPI experienced by the lowest 20 per cent, and 4.9 per cent for the middle 60 per cent. 

This is because cars, petrol and other transport services, which have become significantly more expensive this year, had a larger impact on the spending of this group of top earners, compared to the other income groups.

Such items accounted for a bigger share of its expenditure basket, noted SingStat.

Across all households, the CPI for all items increased 5.2 per cent year on year from January to June, higher than the 3.1 per cent increase in the second half of 2021. 

Overall, the main contributors to the inflation rates for all three household income groups were cars, accommodation, food, petrol, electricity and other transport services.

However, households paid less for telecommunication services in the first six months of the year, compared with the same period last year.

For the period from July to December last year, CPI for all items rose 2.4 per cent year on year for the lowest-income group, 2.7 per cent for the middle-income group, and 3.7 per cent for the highest earners. 

Assistant Professor of Finance Aurobindo Ghosh from Singapore Management University noted that while the increase in inflation seen by the lowest-income group (4.2 per cent) is lower than that for the middle-income group (4.9 per cent), the impact felt by the lowest-income earners is still significant. 

This is because the majority of  the costs - about 57.5 per cent - for the lowest-income earners are on essentials such as food as well as housing and utilities.

In comparison, middle-income earners spend about 47.9 per cent of their budget on food, and housing and utilities, Prof Ghosh added.

Food inflation climbed to 3.7 per cent year on year during the six-month period from January to June, and housing and utilities inflation rose to 4.6 per cent in the same period.

Inflation has been picking up here and around the world as the economy recovers from the Covid-19 lull.

Excluding rentals on owner-occupied accommodation, the CPI went up by 4.1 per cent year on year for the lowest 20 per cent income group, 5 per cent for the middle-income and 6.4 per cent for the highest-income group.

SPH Brightcove Video
With core inflation rate in Singapore at 4.4 per cent, many Singaporeans may find that their salaries are not growing at a fast enough pace to keep abreast with rising inflation.

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