<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0><TBODY><TR>Inflation hit poor hardest <!--10 min-->
</TR><!-- headline one : end --><!-- Author --><TR><TD class="padlrt8 georgia11 darkgrey bold" colSpan=2>By Bryan Lee
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While skyrocketing food costs chomped away at the pockets of the poor, those with bigger purses found themselves forking out much more on petrol, cab fares and vacations. -- ST FILE PHOTO
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<!-- START OF : div id="storytext"-->INFLATION hit low-income families hardest in the first half of the year although richer households were barely better off in the face of a global onslaught of surging prices.
While skyrocketing food costs chomped away at the pockets of the poor, those with bigger purses found themselves forking out much more on petrol, cab fares and vacations.
Thankfully, some relief is in sight with inflation easing 1 percentage point to 6.5 per cent last month. It signals that price increases here have peaked after hitting 26-year highs and are on their way down.
'Inflation is showing clear signs of stabilisation and we are likely to see it on a downward crawl for the second half of the year,' said DBS Bank economist Irvin Seah.
The consumer price index (CPI) for households in the bottom 20 per cent income bracket rose an average of 7.4 per cent in the first six months of the year, said a Department of Statistics report yesterday. This was above the national mean of 7.1 per cent and the 6.9 per cent faced by richer families.
The latest figures marked a return to trend after last year's unusual result in which surging car and petrol prices and costlier travel led the rich to face higher inflation than the poor, who benefited from stable food prices and utility rebates.
'The difference is marginal if you consider that the gap was more than 1 percentage point in 2005 and 2006,' said Mr Seah. 'High inflation is hitting everyone, although in different ways.'
Poorer families were especially hurt by food, housing and utility costs as these items make up a bigger part of their budgets compared with richer households. Food expenditure, for example, makes up 30 per cent of a poor household's budget but just 17 per cent for a family in the top 20 per cent income bracket.
These items are also costing more for poorer families than richer ones. Food prices rose 8.1 per cent for poor households, higher than the 7.5 per cent experienced by rich families. Similarly, housing costs, which include the electricity bill, for the poor jumped 11.6 per cent, against 9.9 per cent for the rich.
'Perhaps better-off households eat out more and are benefiting from restaurants and eateries absorbing some of the hikes in raw food prices,' said CIMB-GK economist Song Seng Wun.
Mr Song added that while utility rebates would have helped the poor with housing inflation, the absence of food subsidies means they have not been shielded by the sharp price jumps of cooking oils, rice and other foods.
'Then again, the Government has been dishing out cash to low- and middle-income families, which are not factored in the CPI.'
=> Resort to using "economists" to pray down the seriousness of the situation?
Read the full story in Tuesday's edition of The Straits Times.
</TR><!-- headline one : end --><!-- Author --><TR><TD class="padlrt8 georgia11 darkgrey bold" colSpan=2>By Bryan Lee
</TD></TR><!-- show image if available --><TR vAlign=bottom><TD width=330>
</TD><TD width=10>
While skyrocketing food costs chomped away at the pockets of the poor, those with bigger purses found themselves forking out much more on petrol, cab fares and vacations. -- ST FILE PHOTO
</TD></TR></TBODY></TABLE>
<!-- START OF : div id="storytext"-->INFLATION hit low-income families hardest in the first half of the year although richer households were barely better off in the face of a global onslaught of surging prices.
While skyrocketing food costs chomped away at the pockets of the poor, those with bigger purses found themselves forking out much more on petrol, cab fares and vacations.
Thankfully, some relief is in sight with inflation easing 1 percentage point to 6.5 per cent last month. It signals that price increases here have peaked after hitting 26-year highs and are on their way down.
'Inflation is showing clear signs of stabilisation and we are likely to see it on a downward crawl for the second half of the year,' said DBS Bank economist Irvin Seah.
The consumer price index (CPI) for households in the bottom 20 per cent income bracket rose an average of 7.4 per cent in the first six months of the year, said a Department of Statistics report yesterday. This was above the national mean of 7.1 per cent and the 6.9 per cent faced by richer families.
The latest figures marked a return to trend after last year's unusual result in which surging car and petrol prices and costlier travel led the rich to face higher inflation than the poor, who benefited from stable food prices and utility rebates.
'The difference is marginal if you consider that the gap was more than 1 percentage point in 2005 and 2006,' said Mr Seah. 'High inflation is hitting everyone, although in different ways.'
Poorer families were especially hurt by food, housing and utility costs as these items make up a bigger part of their budgets compared with richer households. Food expenditure, for example, makes up 30 per cent of a poor household's budget but just 17 per cent for a family in the top 20 per cent income bracket.
These items are also costing more for poorer families than richer ones. Food prices rose 8.1 per cent for poor households, higher than the 7.5 per cent experienced by rich families. Similarly, housing costs, which include the electricity bill, for the poor jumped 11.6 per cent, against 9.9 per cent for the rich.
'Perhaps better-off households eat out more and are benefiting from restaurants and eateries absorbing some of the hikes in raw food prices,' said CIMB-GK economist Song Seng Wun.
Mr Song added that while utility rebates would have helped the poor with housing inflation, the absence of food subsidies means they have not been shielded by the sharp price jumps of cooking oils, rice and other foods.
'Then again, the Government has been dishing out cash to low- and middle-income families, which are not factored in the CPI.'
=> Resort to using "economists" to pray down the seriousness of the situation?
Read the full story in Tuesday's edition of The Straits Times.
