How the high cost of living is hitting Singapore's poor

Image source, OK Chicken Rice

Chicken rice is a staple in South East Asia. It is one of the national dishes of Singapore and is found in almost every food court.

The owner of six chicken rice stalls has previously charged $2.20 for a small portion. The cost of his ingredients has gone up.

The price of chicken has gone up by 50% and vegetable costs have more than doubled since January 2020.

He tells me as we meet at one of his OK Chicken Rice stalls in the north of Singapore that they have been absorbing the costs for a long time.

We held prices for as long as we can because we were hoping for the whole thing to be over, and when the Pandemic hit we thought it was a short-term emergency.

Image source, Getty Images

Mr Tan decided it was time to raise prices after his electricity bills went up.

If my staff are not paid or I have to close down some stores, that is not what we want to do.

Mr Tan has faced staff shortages and higher salaries due to border closings and new employment regulations.

According to the Food and Agriculture Organization, global food prices rose in 2021.

The last time food prices were this high was in 2011.

Higher energy costs affect food and fertiliser production, with global supply chain issues compounding the problem.

The number of families seeking help has increased even in a wealthy nation like Singapore.

When we make door-to-door deliveries, we see that young families with both husband and wife working part-time jobs or in the gig economy, were the ones that were impacted when Covid hit.

She says that it has crept to 20% of the population, including middle income families that might not know where to get help in the first place.

It is not just higher food prices that are affecting those in need.

The price of palm oil has gone up, so hand soaps and sanitisers have become more expensive.

Up to 20% of our requests thus far, especially starting from the second half of last year, has been focused on personal hygiene products.

In the past, at certain times of the year, you might see a price surge, but it seems that this inflation is going to persist.

The impact of higher prices is more severe in other parts of the region. The number of people in Asia who faced hunger in 2020 increased by 54 million from the previous year.

The number of families needing help increased by more than 130% in 2020 and half of them are from Asia.

Food price increases in Asia have been more moderate than in the US or Europe, where inflation has soared to levels not seen in decades.

A good rice harvest in 2021 is one of the reasons for this. Rice prices dropped 4% last year because it was the main staple in many Asian economies.

Asian nations sell a lot of their own food in domestic markets rather than being exported. Governments have been working to make sure food supplies are stable.

In the Philippines, liberalisation of rice imports has allowed the supply to improve which has kept prices low.

China has been stocking up on important food products, which has resulted in it bucking the trend, with the country's food prices falling in 2021.

The second biggest economy in the world, which accounts for 20% of the global population, has been accused of storing up food supplies as it is estimated to hold more than half of the world's corn, rice, and wheat reserves by mid-2022.

Image source, Getty Images

Big supermarket chains like NTUC FairPrice have decided not to pass on higher prices to consumers.

To keep the prices of key products stable, the firm says it is employing various strategies including stockpiling of daily essentials, forward buying, and diversifying our import sources to over 100 countries.

More than 2,000 own-brand products, such as rice, oil, toiletries and cleaning products, are cheaper than comparable popular brands, according to NTUC FairPrice.

Smaller retailers tend to take their cue from larger rivals when pricing goods, according to Mr. Tan of OK Chicken Rice.

They act like a central bank to the rest of the grocery players in Singapore. The good thing about it is that inflation doesn't spike up as much during a crisis, but the bad thing is that entrepreneurship is stifled and only semi-government players can survive.

Image source, Daniel Tan

The question is, after the whole thing is over, how many smaller players are left? asks Mr Tan.

Global food prices are expected to remain high this year, and David Dawe says this is of concern for Asian governments because price hikes have not yet worked their way through the system.

If global prices continue to rise, it will have an impact on lower income families who spend more of their income on food.

Asian countries will continue to be spared from double-digit food inflation, according to economists like Mr Dawe and Dr Abiad.

The issue is more acute for those on the ground, like Mr Tan and Ms Ng. They wonder if higher prices will linger on like the Pandemic has.