Inflation has hit yet another high, at 5.5 per cent, according to the Consumer Price Index (CPI) report released by the Department of Statistics on 23 February.

Of all the component items in the CPI, transport increased the most at 18.4 per cent, from January 2000 to January 2011. The second highest was housing at 5.3 per cent.

Defer fares decrease?

In this connection, I would like to refer to the article “PTC defers annual transport fare review” (ST, Feb 1).

Historically, public transport fare adjustments have always been on 1 October of every year, with the exception of last year, with the implementation of distance-based fares on 1 July, which resulted in an increase in fares for some commuters.

Using the fare adjustment formula of Fare cap = 0.5 (CPI) + 0.5 (WI) – 1.5 %, since the
CPI increase for 2009 was 0.6 per cent and the wage increase (nominal median income for all employed residents) fell by – 1.2 per cent, does it mean that the routine fare adjustment would have resulted in a decrease in fares?

By deciding to defer the fare adjustment to the fourth quarter of this year, it is almost certain that fares will rise because for 2010, the CPI increase was 2.8 per cent, and wage increase was 3.3 per cent.

Operators’ increasing profits?

In this connection, according to SBS Transit’s web site which only shows financial statements from 2003, SBS Transit’s profit after tax grew from $19 million in 2003 to $54.3 million in 2010, an increase of 186 per cent or 16 per cent per annum.

SMRT’s net profits grew by about 14 per cent per annum, or 187 per cent, from $56.8 million in 2002 to $162.9 million in 2010, and transport fares have been increasing almost every year in Singapore, with the exception of a 3 per cent decrease in 2009 because of Singapore’s worse recession.