Forum Letter Reply  |   As published in the Straits Times Forums (03 Jun 2024)

Hawker Prices - Various reasons why consumers experience higher inflation than CPI

We thank Mr Harry Ong Heng Poh for his feedback (Rising prices of hawker food, 28 May 2024)*. The Consumer Price Index (CPI) measures the average price changes of a fixed basket of consumer goods and services commonly purchased by households. The CPI reflects the collective inflation experience for all households which may not correspond to the inflation experience of individual consumers or individual households.

Prices used to compile the CPI are gathered for a wide variety of items from a large number of outlets. Outlets revise their prices at different times for varying food items. The price increases also differ in magnitude. For example, some outlets may significantly increase prices for a particular food item, while other outlets may increase prices only slightly or not at all for the same food item.

As a result, the average price increase reflected in the CPI based on the different food items across outlets could be smaller than the price increase experienced by individual consumers who may purchase food items from certain outlets with larger price increases.

Spending patterns also differ across households. Some households may spend a larger proportion of their expenditure on items that face sharper price increases in the year. These households would therefore experience higher inflation than what is captured by the CPI inflation rate, which reflects the average price increase across households.

More information on why the reported inflation may differ from an individual’s experience can be found at https://go.gov.sg/infographics-economy-cpi-inflation.

* Rising prices of hawker food, 28 May 2024

I was surprised to read that a Singapore Department of Statistics study found that hawker food prices rose by only 6.1 per cent in 2023, as I believe the prices were understated (Hawker food prices rose by 6.1% in 2023, but cost pressures easing, May 26).

Consumers are aware that the price of hawker food, especially in 2023, rose by at least 50 cents to a dollar, amounting to an increase of at least 20 per cent.

Moreover, the food operators try to cut corners by reducing the quantity of food served, hoping that the customers will order a bigger plate and pay more.

The survey should look not only at the prices but also the quality of the food served.

We do not mind paying more for our food provided we get value for money.

Even after the price increase, it seems that there are fewer prawns in a plate of Hokkien mee and the quality of fishballs in a bowl of noodles has dropped.

Even the price of takeaway food containers has increased from 20 cents to 30 cents.

When consumers bring their own containers, the stallholders show their displeasure by asking the consumers to take off the lids and put back the lids themselves.

Harry Ong Heng Poh