Singapore was ranked the second most expensive city in the world by the Economist Intelligence Unit (EIU) in its Worldwide Cost of Living 2021 survey. In its ranking published on 1 December 2021, Singapore was tied in second place with Paris, up from fourth position in the previous year.
However, the EIU’s findings may not reflect the cost of living of Singaporean households and here are the reasons why.
First, the composition of items in the EIU consumption basket is different from the typical consumption pattern of Singaporean households.
The EIU survey is designed to enable Human Resource managers around the world to calculate cost-of-living allowances and put together compensation packages for expatriates and business travellers. The EIU consumption basket is not based on the typical consumption pattern of Singaporean households and is therefore not a good gauge of cost of living for Singaporean households.
For instance, the EIU consumption basket includes items such as international foreign daily newspapers that tend to be more expensive than what Singaporean households typically consume like local newspapers.
A more representative indicator of cost of living in Singapore is the Consumer Price Index (CPI), which measures the average change in the prices of a basket of goods and services commonly purchased by Singaporean households.
Second, the EIU survey findings were compiled by comparing the prices of goods and services across countries and converting them from their local currencies to US dollars. This means that the rankings are sensitive to currency fluctuations.
However, currency fluctuations have less impact on the cost of living of Singaporeans who earn their income in Singapore dollars.
Are prices in Singapore going up?
Nevertheless, like many economies around the world, Singapore is seeing higher inflation lately. Inflation in recent months has been driven by both external and domestic drivers.
How have prices in Singapore changed over time?
Based on the CPI, prices rose by 2.9% between July and November 2021, compared to 1.5% in the first half of 2021. This follows from a 0.2% decline in prices in 2020.
You can access more information on the CPI from the Singapore Department of Statistics’ website here.
How is the Government helping Singaporeans to manage rising costs?
1. Manage domestic supply-side constraints. This includes managing the supply of industrial and commercial space, to help moderate business cost increases and reduce the knock-on impact on consumer prices. During the COVID-19 pandemic, the Government has also disbursed rental relief and implemented schemes such as the Wage Credit Scheme, Jobs Support Scheme and Jobs Growth Incentive Scheme to help businesses cope with costs.
2. Promote competition in markets so that Singaporeans can enjoy competitive prices. This includes lowering barriers to entry, where possible. It also entails diversifying the sources of supply, including for food, to prevent sharp price increases in the event of disruptions.
3. Shift towards an appreciating path for the trade-weighted Singapore dollar (the Singapore dollar nominal effective exchange rate or S$NEER). A stronger Singapore dollar helps to mitigate imported inflation and temper domestic cost, to ensure price stability over the medium term.
4. Implement community support programmes. The Government has worked with cooperatives such as NTUC FairPrice on programmes to help Singaporeans cope with higher prices for daily necessities.
In addition, Singaporeans can tap on these support schemes: