See also
Observation: Peak inflation is driven mostly by gas price, across SG, U.S. and Europe.
! This episode has seen rising bank interest income…. might lead to a net gain (against rising costs), iFF “enough free cash”
==== how much impact felt by me, my middle class peers or the poor
zoom-in on my exp recon record… I have a reliable, verified record of my monthly burn rate.. a valuable data set.
Q: which major categories would see the biggest hit?
A: taxLike[incl. mtg-I], misc[incl.supermarket]. Note I do pick and pay for groceries myself.
Q: what rate of inflation (in percent-per-year) would threaten my pff?
A: assuming $1000/M in misc category, so 7%/year inflation over 10Y would double it and affect my pff.
Bold: I believe my middle class cohort in SG and U.S. are well-off enough to be unaffected by an still-higher inflation, except…
What if a US middle class family earns USD 140k after tax, spends 120k, and tries to save 20k/Y? Inflation could cut family saving rate by 2~10k/Y, considering school fees, gas, fancy vacations,,,, So brbr, rather than income, seems to determine the inflation impact on a household. With a thick buffer, many middle class families don’t feel much impact.
— UK energy bill .. in Aug 2022, UK energy bill per household was projected to hit SGD 500/M, representing 11% of the median disposable income per household.
My reaction when I read it? Not much. I imagined my own total bill (currently SGD 200) rising to SGD 500, and I told myself we would simply cut consumption. Realistically how low can we cut to? Perhaps down to $400. That’s still huge inflation but not a big hit on my family burn rate…. compared to big tickets like edu[MSFM/Mindchamps/enrichment///], maid, IRAS
That’s one straw on the camel’s back, not the last straw.
— US 40-year high inflation .. in Mar 2022, U.S. inflation hit a 40-year high, but my midclass friends didn’t feel much impact, according to my informal chats.
Those who struggle to save can be wiped out by inflation. I think that’s one reason U.S. media has so much coverage of inflation — U.S. households are reported to have low saving rate i.e. low BRBR.
— SG 10-year high inflation .. In Mar 2022, Sg core inflation hit a 10-year high. It provided a rare glimpse into (solar eclipse) “high inflation in the Singapore (and U.S.) context”. ‘A perfect storm’: Why inflation is rising in Singapore and what can be done – CNA (channelnewsasia.com) has one section focused on average consumers, with a breakdown by CPI category.
- housing .. modest inflation at 1.4%pa, despite utility tariff hikes
- .. Note home price inflation of 2021 is NOT captured in CPI inflation, but it indirectly pushes up rental
- nutrition .. same inflation at 1.4%pa, but this was before the Ukraine war
- gas and non-public transport.. contributed to a 9% inflation in the transport category over 2021
- ( mortgage interest cost .. is part of CPI, but this category’s inflation figure is absent in the article.)
Q: Based on the official basket compositions, over 2021-2022 did I feel any noticeable livelihood pain due to CPI (given it was a 10-year high)?
A: yes, non-zero
- MRT fare, taxi fare
- Cristofori
- cinemas .. focusing_effect
- utilities… not noticed but I believe there is
- desserts, fresh cut fruits
- During this period, arguably the hottest basket item is rental, according to my 2022 colleagues (foreigners).
Wife said groceries (part of misc category) has seen up to $300/M hike over recent years.
Q: Are the official composition and the 2022 inflation numbers relevant, reliable, and realistic?
A: generally yes, though I have no real experience on housing inflation. My experienced inflation might be higher or lower than official numbers.
https://www.channelnewsasia.com/commentary/inflation-taxes-rising-costs-living-supply-chains-singapore-budget-2022-2492451 .. The chief author is a Chicago-Fed economist and professor, educated in the US.
The authors claimed that “Inflation has been high chiefly because of the unprecedented stimulus from fiscal and monetary policies worldwide”
The authors characterized the current situation as “a large amount of cash and a small supply of goods”… referring to QE and supply-chain disruptions during the pandemic.