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Prices up everywhere, but inflation rate for food low here

Govt casting net wider to source for food; businesses also helping to limit price hikes

FACTORY operator Loke Yew Whye, a 54-year-old father of three school-going children, is finding it hard to cope with rising food prices.

The family, which survives on about $2,000 a month, which he and his wife earn, has been buying house brands from one of supermarket chain NTUC FairPrice’s Bedok branches to save money.

Last night, for example, a 5kg bag of FairPrice Thai fragrant white rice cost the family $4.70, half the price of a similar-size bag of Royal Umbrella fragrant rice at $9.50.

Minister of State for Trade and Industry Lee Yi Shyan yesterday urged Singaporeans to consider alternatives, such as by buying house brand products, as a way to cope with rising food costs worldwide.

Last year, food prices were 2.9 per cent higher than in 2006, going by the consumer price index (CPI).

Globally, market forces pushed up food prices.

Record oil prices raised the cost of producing and transporting food, while increasing wealth enjoyed by people in China and India have pumped up demand for meat and other food items, edging them northward.

On the other hand, bad weather reduced crop yield, so the mix of higher demand and lower supply have sent prices up.

Mr Lee added: ‘As Singapore imports most of its food, we can’t run away from this worldwide trend of rising prices.’

But the Government is not going to step in to impose price controls, he added.

‘From the experience of other countries which have done so, price controls have always led to hoarding, empty shelves and black market pricing,’ he said.

Instead, the Government is fighting the problem by diversifying its food sources to reduce the impact of supply disruptions from any single source.

For example, the Agri-Food and Veterinary Authority has looked beyond Malaysia and China for vegetables.

The supply of greens now also comes from Vietnam and Indonesia.

NTUC FairPrice is doing the same with rice and other produce.

Its managing director, Mr Seah Kian Peng, said FairPrice is buying Vietnamese rice, which is 20 per cent cheaper than Thai rice.

NTUC also packages items from cooking oil to soap under its house brand. These are generally 10 to 15 per cent cheaper than branded items, he added.

Meanwhile, it appears that businesses have not passed on the full brunt of increased prices to consumers.

Last December, the prices of imported food increased by 12.1 per cent from prices in December 2006, but the non-cooked food component of the CPI, such as rice and meat, went up by only 7.1 per cent during the same period.

What this means, Mr Lee said, is that supermarkets and shops have not passed on their full cost increases.

He pointed out that inflation among food items here has remained low by international standards.

The Republic has one of the lowest rates of inflation when it comes to food, going by a survey of 14 countries by the Australian Bureau of Statistics. Only Japan, Australia and South Korea had lower rates than Singapore.

But the question is: Will food prices continue rising?

Mr Lee said did not know, because food prices were shaped by a variety of factors.

For a consumer like Mr Loke, the rising costs of utilities and public transport, as well, add to his worries. He said in Mandarin: ‘The price increases all add up. The cost of living is becoming a bigger burden by the day.’

 

Source: The Straits Times 4 Feb 08

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