Forum Letter Reply  |   As published in the Straits Times Forums (05 Apr 2023)

Consumer Price Index - Inflation data factors in changes in product quantity

We thank Mr Foo Sing Kheng for his feedback (Inflation data should take into account shrinkflation, 30 Mar 2023)*. The Consumer Price Index (CPI) measures average changes in the prices of a basket of consumer goods and services commonly purchased by households.

In compiling the CPI, the Singapore Department of Statistics accounts for changes in quantity, where possible, by adjusting the price data of the items tracked in the CPI basket on the basis of a fixed unit of measurement.

For example, if the packaging quantity of an item in the CPI basket changes from 200g to 180g but the price is unchanged at $6, the item’s price will be computed as having risen from $3 per 100g to $3.33 per 100g in the CPI.

For food items where certain ingredients were previously provided at no charge, but are now charged separately, the additional charge will generally be computed as an increase in the price of the food item.

For more information on CPI compilation, please refer to the SingStat website, go.gov.sg/latestdatapriceindices.

* Inflation data should take into account shrinkflation, 30 Mar 2023

It was reported that food inflation was unchanged in February at 8.1 per cent, as a steeper increase in non-cooked food prices was offset by a smaller rise in the prices of prepared meals (Singapore core inflation holds firm at 14-year high of 5.5% in February, March 23).

There are many occurrences of shrinkflation taking place which may not be reflected by the reported food inflation rate.

Many food vendors have started to charge for ingredients that used to be free or have always been part of a dish.

A bowl of sliced fish soup used to come with a dash of evaporated milk. Nowadays, stallholders charge me at least 50 cents for the milk.

A whole chicken purchased from the wet market used to include chicken fat, which is a key ingredient in chicken rice recipes. Now, I see packs of chicken fat for sale, priced at a dollar or two.

Even when it comes to groceries, shrinkflation is a common practice by companies as a way of managing profit margins by adjusting the weight and volume of products sold while maintaining the same selling price.

A branded chocolate bar which used to weigh 200g could now be 180g, yet the selling price remains the same.

I welcome measures such as the Assurance Package and GST (goods and services tax) Voucher scheme to target the rising cost of living. However, I hope the authorities will consider the impact of shrinkflation in people’s daily spending, which may not be accounted for fully in the official inflation figures.

Foo Sing Kheng