Lowest income hardest hit by inflation, but not much affected as they own homes?
I refer to the article “Pace of inflation quickens again” (Today, Jul 24).http://www.todayonline.com/Singapore/EDC120724-0000044/Pace-of-inflation-quickens-again
Inflation increase to 5.3%
It states that “Year-on-year, inflation last month was 5.3 per cent, compared to 5 per cent in May … in the first six months of the year, households in the lowest 20 per cent income group were hardest hit by inflation, compared to the other income groups.
Lowest 20% income group hardest hit at 6.3%
While the CPI for all items averaged 5.1 per cent for all households during this period, this group experienced a 6.3-per-cent increase in prices.
In comparison, the middle- and high-income households experienced price increase averaging 5.2 per cent and 4.6 per cent, respectively”.
No impact on such households as they own homes?
As to “In a statement, the department said: “However, these overall differences between the groups were attributable to higher imputed rentals on owner-occupied accommodation, which have no impact on the actual cash expenditure of such households as they own their homes”.
It added: “Excluding these imputed rentals on owner-occupied accommodation the CPI increases were comparable for the three income groups, at 4.1 per cent, 3.9 per cent and 4.0 per cent for the lowest 20 per cent, middle 60 per cent and highest 20 per cent income groups, respectively”.
Don’t forget HDB rental flats?
DBS economist Irvin Seah noted that some lower-income families – those who cannot afford to own homes and have to resort to renting – would have felt the full brunt of inflation”, I believe most of the over 50,000 HDB rental flats’ tenants may be lower-income families. There may also be thousands of lower-income families in Interim Housing, renting a room in the HDB open market, etc.
Low income also had HDB rentals increased?
In this regard, since HDB rentals’ “rates are pegged at HDB market rent and are subject to changes”http://www.hdb.gov.sg/fi10/fi10323p.nsf/w/RentDirectHDBRentDeposit?OpenDocument#FirstTimer, tenants may be impacted by higher inflation and higher market rents.
Moreover, the HDB had changed its policy a few years ago to increase the 1 and 2-room rentals from $26 and $44 to as much as $205 and $275, respectively, for those with household income between $801 to $1,500, 2nd-timers, after the initial 2-year rental period, etc.
Prior to this policy change, I understand that the rental was simply $26 or $44, as long as a household’s income was not more than $1,500, without any increase for 2nd-timers, income over $800, etc.
How can a family earning $801 afford the increased rental of up to $275, or for that matter a 2nd-timer family earning $800 or less having to pay increased rental of up to $165?
Since a 1st-timer is generally defined as one who has never owned a HDB flat, I believe many rental tenants ended up paying more.
Such policy changes cause financial stress to lower-income families.
Clearly, the lowest-income group need more help, with rising utilitiy bills as well.
So, lets look at one example of recent news about how they are being helped.
Help based on those in need, or money donated?
South West Community Development Council (CDC) will be increasing the
number of needy families receiving $50 a month in food rations under its Food West programme, from 320 last year, to 550 families from 1 July.
The bigger group of beneficiaries this year is the result of the
longer list of companies that are contributing this year.
Whilst I applaud the CDC’s efforts and the generosity of the
contributing companies, this may highlight the issue of whether the
number of families helped, should be based on need, rather than how
much donations the CDC can get?
Why compete for charity dollars?
CDCs are also, in a way, competing with Voluntary Welfare
Organisations (VWOs) for charity dollars.
Why not use Budget surpluses?
With a Budget surplus of $2.3 billion last year, and a net Budget
surplus of $8.2 billion over the last six years, why do the CDCs have
to embark on its almost never-ending quest for more donations?
Leong Sze Hian