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06-02-2013, 07:03 AM
This is depressing news - reinforces my view that the "poor get poorer while the rich get even richer". 
The Straits Times
www.straitstimes.com
Published on Feb 06, 2013
Poorest households hardest hit by inflation
Rising housing and health-care costs pushed up their living costs by 5.6%
By Fiona Chan Senior Economics Correspondent
SINGAPORE'S poorest bore the brunt of inflation last year, as higher housing and health-care costs hit them particularly hard.
Households in the bottom one-fifth income bracket were hit by a 5.6 per cent rise in their cost of living, higher than the 4.6 per cent average increase for the whole country, according to figures released by the Singapore Department of Statistics yesterday.
For the richest one-fifth of households, the cost of living rose by only 4.2 per cent.
This is a turnaround from 2011, when the lowest-income households enjoyed lower inflation than the average.
Rising housing costs were the main reason for the change, as these tend to take up a larger proportion of poorer households' incomes. From 2011 to last year, they were the only group that saw a rise in housing inflation.
If imputed rentals from housing costs had been excluded, however, inflation for the poorest households would have been slightly lower than for other groups. Imputed rentals are the Statistics Department's own estimate of home values and do not actually figure in home-owners' cash spending.
But economists think the overall inflation figure, including imputed rentals, provides a better picture of the true cost of living.
"Housing is the largest expenditure item most households will have to spend on, be it in the form of rentals or mortgage payments," said Barclays economist Joey Chew.
The lowest-income group spends more than a third of their total expenditure on housing, while other groups spend about a quarter.
Excluding imputed rentals thus "runs the risk of underestimating the full extent of the inflationary impact of the property market on the cost of living", said DBS economist Irvin Seah.
Health care was another relatively bigger burden on lower-income earners last year.
Not only did they see the sharpest percentage rise in health-care costs across all income groups, they also felt it more acutely as they spend a bigger proportion of their income on health care, said UOB economist Francis Tan.
"Health-care costs are on the rise due largely to labour cost pressures," said Ms Chew, who expects inflation in this area to remain "stubbornly high" this year.
She noted that the rise in health-care costs accelerated last year from 2011. On average, consumers paid 4.5 per cent more for health care last year, compared with 2.4 per cent more in 2011.
But the news is not all bad for lower-income households. They saw a smaller rise in food and transport prices than richer households last year, and the gap between their inflation levels and the overall average also narrowed in the second half of the year.
Inflation in July to December last year was 4.8 per cent for the poorest one-fifth of households, down from 6.3 per cent in the first half. The average rate for the country overall was 4.1 per cent in the second half, compared with 5.1 per cent for the January to June period.
fiochan@sph.com.sg
The Straits Times
www.straitstimes.com
Published on Feb 06, 2013
Poorest households hardest hit by inflation
Rising housing and health-care costs pushed up their living costs by 5.6%
By Fiona Chan Senior Economics Correspondent
SINGAPORE'S poorest bore the brunt of inflation last year, as higher housing and health-care costs hit them particularly hard.
Households in the bottom one-fifth income bracket were hit by a 5.6 per cent rise in their cost of living, higher than the 4.6 per cent average increase for the whole country, according to figures released by the Singapore Department of Statistics yesterday.
For the richest one-fifth of households, the cost of living rose by only 4.2 per cent.
This is a turnaround from 2011, when the lowest-income households enjoyed lower inflation than the average.
Rising housing costs were the main reason for the change, as these tend to take up a larger proportion of poorer households' incomes. From 2011 to last year, they were the only group that saw a rise in housing inflation.
If imputed rentals from housing costs had been excluded, however, inflation for the poorest households would have been slightly lower than for other groups. Imputed rentals are the Statistics Department's own estimate of home values and do not actually figure in home-owners' cash spending.
But economists think the overall inflation figure, including imputed rentals, provides a better picture of the true cost of living.
"Housing is the largest expenditure item most households will have to spend on, be it in the form of rentals or mortgage payments," said Barclays economist Joey Chew.
The lowest-income group spends more than a third of their total expenditure on housing, while other groups spend about a quarter.
Excluding imputed rentals thus "runs the risk of underestimating the full extent of the inflationary impact of the property market on the cost of living", said DBS economist Irvin Seah.
Health care was another relatively bigger burden on lower-income earners last year.
Not only did they see the sharpest percentage rise in health-care costs across all income groups, they also felt it more acutely as they spend a bigger proportion of their income on health care, said UOB economist Francis Tan.
"Health-care costs are on the rise due largely to labour cost pressures," said Ms Chew, who expects inflation in this area to remain "stubbornly high" this year.
She noted that the rise in health-care costs accelerated last year from 2011. On average, consumers paid 4.5 per cent more for health care last year, compared with 2.4 per cent more in 2011.
But the news is not all bad for lower-income households. They saw a smaller rise in food and transport prices than richer households last year, and the gap between their inflation levels and the overall average also narrowed in the second half of the year.
Inflation in July to December last year was 4.8 per cent for the poorest one-fifth of households, down from 6.3 per cent in the first half. The average rate for the country overall was 4.1 per cent in the second half, compared with 5.1 per cent for the January to June period.
fiochan@sph.com.sg
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