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Inflation hitting Singapore households harder, says DBS bank study

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The global inflation wave that has crashed onto Singapore’s shores is hitting households harder as they pile up more expenses while incomes aren’t keeping up.

That’s the conclusion of DBS Bank analysts, who dissected data from 1.2 million retail customers — anonymous and aggregated — to understand the impact and implications of soaring price growth in the city-state. Consumers are spending more relative to income, with an expenses-to-income ratio rising to 64% in May from 59% a year earlier.

More troubling, low-income groups are seeing expenses grow 5.6 times faster than their income — providing a window on why policymakers have prioritized relief targeted toward the most vulnerable households. Those subsidies aren’t accounted for in the income component of the ratios DBS computed.

“From a policy standpoint, having a strong Sing dollar definitely will help” to keep imported inflation at bay, Irvin Seah, senior economist at DBS, said in a briefing with reporters. The Monetary Authority of Singapore has tightened monetary policy four times since last year, and fiscal packages have provided relief especially on the lower end.

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But even as policy helps, “it is really down to the responsibility of the individual to manage their finances” and mitigate inflation impact, Seah said.

While 40% of that customer base has seen income growth of less than 5% in the year through May, consumer prices picked up at a faster clip, 5.6%, in the same period.

What’s more, the key drivers of inflation are categories that are top priority for consumers: housing, food, and transport make up about 63% of DBS customers’ budgets. Price growth in expenses runs in the double digits across categories, including 60.2% for transportation and about 57% for a discretionary basket including shopping, entertainment, and travel.

One silver lining in the data: The DBS analysts did see some signs of upward mobility, with 51,588 customers — or about 23% of the base — moving into the next-highest income bracket, S$2500-S$4999 ($1813-$3624), from the lowest group in the past year.

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