The MAS/MTI letter (below) on inflation in SG is quite disingenuous! 😆
Of course, I’m not among the coterie lucky or unlucky enough to have bought a car when COEs are back again at sky-high levels. Two years ago, the $90K for one top-end COE could have bought 2 low end cars (COE included) in the mass market COE segment where I belong.
Slightly more than two years ago, I was in the market to buy a new car. But because of my conservatism, my budget and the fact that my car hadn’t yet reached the midway when its COE would expire, I didn’t go for a guaranteed COE.
Hence today, I’m looking at an LTA invite to have my car “medically” checked be4 it turns 7 come July.
Mayb MAS and MTI would think me damned unreasonable but I believe I’m as affected as anyone — including the 8,000 who have bought new cars — by the latest bout of inflation. If I add in the inflation starting around April 2010 to date, i would say my inflation hit is far worse than 5.2%, considering that I have been holding enough savings since 2010 that would have allowed me to buy a new car outright (after selling my old car, of course). But runaway COEs knocked me off track.
I come now to the other argument put forward by MAS and MTI: that as the majority of us own our homes, we are not affected by the 1.8 per cent spike in imputed rentals. Right they are but Ms Fernandez and Mrs Keng appear to forget things like annual value and property tax.
Higher rental values lead to higher imputed annual values for homes. Sure, owner occupied homes pay a concessionary rate (for which I’m eternally grateful!) but you don’t need Einstein to figure out that XX% of an AV of $1oK is far higher than XX% of AV of $20K.
Meanwhile yours truly is paying more for utilities, cooking gas, lemon grass, spring onoin, domestic help, petrol etc on the one hand while my savings are buying less by the day, even if I don’t aim for a Ferrari.
Haha, I’m viewing inflation in perspective too — my perspective!
|Dear Editor,Viewing Inflation in Perspective
1 We refer to Mr Ng Boon Chye’s letter “What’s the plan to blunt spike in domestic inflation” (ST 26 Apr 12).
2 Singapore’s inflation rate is currently high, but its impact on the majority is much less than suggested by the headline numbers. Of the 5.2% increase in the Consumer Price Index in March 2012, about 1.8 percentage points was accounted for by the increase in imputed rental costs of owner-occupied housing. As the majority of resident households in Singapore own their homes, they do not actually incur rental expenditure. Likewise, the sharply higher COE premiums for the first three months of this year affected around 8,000 new car buyers, or a small proportion of resident households.
3 Nonetheless, inflation is currently higher than what Singapore has seen historically and the Government and MAS remain committed to bringing it down. MAS tightened its monetary policy stance further in April 2012. A stronger Singapore dollar not only caps imported inflation, but also moderates the external demand for our goods and services, thereby also reducing pressures of demand in the labour market and for other domestic resources such as space. Over the medium term, this should ease domestic price pressures. The government has also implemented various macroprudential measures to cool the property market. Although the CPI index does not reflect property prices, the cooling of the property market should over time help to bring down other domestic costs. In the meantime, the Government has also been providing households with cash transfers that help cushion the impact of rising costs.
Mrs Cindy Keng
Ms Angelina Fernandez