Nov 13, 2007

Perhaps the Minister is a Little Confused

Either that, or he is engaging in obfuscatory political doublespeak:

ST Nov 13, 2007
Inflation could hit 5% early next year, then taper off
By Li Xueying

AS CONSUMER prices continue to rise, inflation in Singapore will likely surge to 4 or 5 per cent in the first quarter of next year.

But it should taper off by the second half of the year to 'more normal conditions', said Trade and Industry Minister Lim Hng Kiang yesterday.

The average rate for next year should be around 3 per cent.

Fuelled mainly by rising global oil and food prices, inflation recorded a 13-year high of 2.9 per cent in August. It is expected to dip to 2.7 per cent in the last quarter, Mr Lim told Parliament.

Citigroup economist Chua Hak Bin said that the 5 per cent rate predicted would be a 'historic high' in the 25 years since 1983. The previous high was in July 1991, when it hit 4 per cent.

Most economies, including Singapore's size up inflation by tracking the Consumer Price Index, or CPI. The CPI measures the cost of a basket of goods and services consumed by most households.

Yesterday, Mr Lim cautioned against 'interpreting a rise in the headline CPI as necessarily reflecting an increase in the cost of living'.

It depends on the individual household's spending. 'Switching to cheaper products can reduce the cost of living despite a rise in the CPI,' he added.

But of course a rise in the CPI reflects an increase in the cost of living. After all, the CPI is meant to track the cost of living. If the CPI does not track the cost of living, then what would you want it for?

As for individual households switching to cheaper products, well, in fact, they have to. That’s the effect of inflation - your dollar has less purchasing power. Therefore with the same amount of dollars, you can only buy cheaper products.

Minister Lim must be confusing “cost of living” with “standard of living”. Cost of living means the cost of maintaining a certain standard of living. In turn, standard of living refers to the quality and quantity of goods and services generally available to a certain class of people (for example, average Singaporeans).

Instead of saying that “switching to cheaper products can reduce the cost of living”, Minister Lim would have been more accurate to say, “switching to cheaper products can lower the standard of living”. For example, instead of living in a 5-room HDB flat, you can live in a 1-room HDB flat (a cheaper product). Instead of having chicken rice and vegetables for lunch, you can just eat plain porridge (a cheaper product).

Living in a 1-room HDB flat and eating plain porridge constitutes a lower standard of living. So yes, by switching to cheaper products, you can lower your standard of living. And a lower standard of living does cost less to maintain.

In summary, what is Minister Lim's advice to you? To deal with inflation, lower your standard of living.

Wow, and for telling you that, he even gets a world-class ministerial salary. I bet inflation doesn't bother him much.


Anonymous said...

Doesn't matter what the minister say. There is no competition in politics in SG so he will still be the minister with million dollar pay. His fate is all up to Lee Hsien Loong or maybe MM Lee, not the opposition or the electorate. This is not the first time they say things which insult people's common sense.What to do?

Anonymous said...

It doesn't take much to win the hearts of the masses, via e.g. handing out coupons on a per household basis that allows them to buy certain quantities of certain staples (e.g. rice) at near cost.

Leadership is about winning the logos, ethos and pathos. It is unfortunate that 'coat-tail'ing has resulted an abysmal lack of ethos and pathos - things that can only be learnt by standing, fighting and winning an election, a regret that MM has reiterated.

Anonymous said...

What Lim Hng Kiang said about cheaper products reminds me of what one of Chen Shui Bian's minister said about the hike in the prices of vegetables in Taiwan recently : One can always switch to buying cheaper vegetables at 5 taiwanese dollar per kg (without realising that bean sprouts was the only choice available at $5/kg).

It only shows how disconnected our overpaid ministers are from the realities of peasant life.

Anonymous said...

The CPI may have already factored the possibility of switching to cheaper substitutes.

There are many different methodologies that have been developed to calculate cost-of-living indexes, including ones that allow for substitution among items as relative prices change.

I'm not sure to how the CPI was derived. If cheaper substitutes were already used in the calculation of CPI and we are still seeing an increase, the cost of maintaining a similar standard of living, would be even higher than what it is reported on the CPI.

choaniki said...

OMG, another case of, "If they have no bread, let them eat cake!"

How many times will our elitist gahmen continue with this line of reasoning, I wonder.

Anonymous said...

If the rise in prices is not limited to Singapore, I can accept it.

If ministers are not willing to think up solutions and try to reduce the magnitude of the problem, I can't.

At the very least, they can do something for the lower income groups, if they wanted to.

Anonymous said...

Lim Hng Khiang is just pure funny...basically telling the public not to use the CPI for its purpose but to believe his words instead...

Really can't tahan...

Mr Wang, hope your comments are all archived so that come election time (still years away), I'll be able to refer to these golden comments from our ministars

Anonymous said...

And the sad thing is the ability to choose is being pulled out from under us. Remember this when our Health Minister introduces means testing for all citizens - we will realise then that we cannot choose to go to a C ward, because we have a particular amount of salary, we live in a particular type of housing etc etc - regardless of whether we have 3 children, grandparents to support etc. The government can do many things to help - but it chooses to make our hospital revenue centres - medical hubs - that is why costs will continue to go up.

Anonymous said...

If switching to cheaper products can reduce the cost of living, then I don't mind. However, if switching to cheaper products is going to affect our health then we need to rethink because at the end of the day, the amount spend on health care may end up even more. E.g. compare the price of Full cream milk with Non-fat milk; compare the price of normal eggs and low cholesterol eggs.

Dear million dollar minister, you know what I am talking about!

Anonymous said...

Dear Mr Wang:

Another great post!!

From what I am aware of, most (if not all) ministers DO NOT prepare their own speeches. They usually have a scholar PA doing it for them while they are busy with other stuff (such as golf, high tea....etc)

I will not be the least bit surprised if Lim HK had totally no idea what he was saying during the speech.

Again, why would anyone bother understanding their "own" speeches when nobody is going to hold them accountable anyway.

Thus is life in Singapore

Anonymous said...

Another Wayang speech by the Universe's Best Paid Ministers!

So he wants all of us to lower our standard of living because of a higher cost of living! Get it? No solution - because they started the ball rolling with their vulgar salaray increases and GST!

Anonymous said...

The minister's comments are the biggest bullsh*t i've ever come across from a politician. You mean this is the quality of the PAP ministers? Sheesh! I am seriously starting to believe that they think we are dumb. This is pretty insulting.

James Chia said...

I cannot accept our minister telling us to lower our standard of living due to rising prices but on the other hand, continuing with higher taxes through GST, ERP etc. GST for one is really unnecessary. Till now I still don't see how it's raised to help the poor!

Anonymous said...

I'm just glad I've finally managed to cancel my subscription to the Straits Times. We received a letter from them sometime in August, telling us that our subscription would end in October, and we would need to inform them if we wanted to renew our subscription. As we wanted to terminate the subscription anyway, we did nothing. And guess what? The Straits Times newspapers continued appearing at our doorstep. We got fed up, called their hotline, and informed them that we didn't want their newspaper anymore. And then, it stopped, after several days!

Now, I'm a cheapskate who reads the free Today newspaper a colleague passes to me after he's done reading it. And even reading that upsets me sometimes, so I'm actually pretty fine just reading blogs and watching a bit of the news sometimes.

Singapore is really a dot on the world map and there is so much more newsworthy stuff to read about than what this MP/NMP said or what that minister said.

Anonymous said...

Lately we have been treated to some remarks by some ministers that are in the "just for laughs" category. No wonder more and more Singaporeans are getting sceptical about Singapore politics.

Anonymous said...

If they can say that raising GST is to help the poor, what can you expect to hear from the mouths of our million dollar ministers. Trust them to come up with more 'innovative' ideas to help poor Singaporeans cope with rising cost. As someone said, perhaps they are going to suggest you eat just two meals a day, or bathe just once a week.

Anonymous said...

Our dear leader ever said that Singapore may need a dose of bad government because he felt that Singaporeans are complaining so much about the high pay of the ministers.

Well, are we getting a dose of bad government? The minister had just given us a dose of bad taste.

Maybe, our ministers listened to the instructions of our dear leader (very seriously) and giving us a dose of bad government.

Anonymous said...

Why do consumers have to be the only ones switching to lower cost options? And if everyone was to switch including producers then wouldn't that eliminate inflation?

Yes I know that inflation is an increase in the amount of money in circulation relative to the goods and services available. Who then controls the money supply? Why is there an oversupply? Who benefits from that oversupply?

Anonymous said...

Is that how poor people get poorer? If collect GST to help the poor, how about inflation? I think our elite garman is running of ideas and is asking us to solve OUR OWN problem, inflation by reducing OUR standard of living. YES!!! A good way to solve their problem is by making it our problem. Haha in future we will see half room flat!!! The poor must absorb all the cost to make the rich, richer!!!! Is that true Mr rich minister? Damn funny....

Anonymous said...

Typical pap attitude towards Singaporeans. They are never interested in the welfare and future of Singaporeans. They are very focus on their own selfish interests. They are only interested in maintaining their stranglehold on power and $billions.

Anonymous said...

The minister just couldn't be bothered ..... the look on his face tells that he has nothing but bad news whereas the PM can only say "I love you but I have nothing to give you ...."

Anonymous said...

Singaporeans are suffering from serious amnesia come every election. Hopefully the next election, they are cured from this illness

wee said...

To be fair, the statement "cautioned against 'interpreting a rise in the headline CPI as necessarily reflecting an increase in the cost of living'" can actually be intepreted to mean a rise in CPI does not neccesarily affect real cost of living.

Nominal cost of living might go up due to inflation but do factor in the nominal rise in wages too. Thus a rise in CPI might truly mean nothing if real wages rise accordingly.

The only fault I see here is the inability of Lim Hng Kiang to articulate himself properly. But then again to give an economics lesson in an interview might not be too newsworthy.

Anonymous said...

does that mean we haf to shop at NTUC fairprice supermarket?? Lowest price guarantee!!!! ;-)

Eaststopper said...

Well, if you read Mr Lim's comments a tad deeper, he's basically saying that
1/ The rate of increase of CPI has caught the Singapore government off-guard
2/ Our exchange rate policy will be ineffective till mid next year and will depend on how other central banks tackle inflation

MAS only weapon against inflation is the exchange rate policy, but this has drawbacks - one being that if the targeted curreny is strengthening across the board, it is tough for the SGD to strengthen against it. For instance, how much more can SGD strengthen against the EUR? EUR is now the currency of choice of many investors.

The high inflation rate will penalise savers, especially when singapore banks charge such low interest rates. Better to borrow in SGD and deposit in NZD or AUD.

Anonymous said...

Simple economics 101.. i can't believe Lim Hng Kiang is a president scholar.

Anonymous said...

And didn't a minister speak about spiralling wages in Singapore? They've to think of themselves as they speak, when they justify their own pay hike as a reward for good governance.

Anonymous said...

"Simple economics 101.. i can't believe Lim Hng Kiang is a president scholar."

It is called spin.

If you want to sell crap like sub-prime mortgages you cannot name it "Poor Man, No money, Lousy Credit Fund now can you? Call it "High Grade Structured Enhanced Leveraged Fund" and even wall street boys and savvy, sophisticated investor will buy!

Anonymous said...

/// wee said...
Nominal cost of living might go up due to inflation but do factor in the nominal rise in wages too. Thus a rise in CPI might truly mean nothing if real wages rise accordingly. ///

Wee, the proportion of Singapore residents earning less than S$1,000 a month rose to 18 percent last year, from 16 percent in 2002, central bank data released late last month show.

Anonymous said...

Lowest price guarantee by NTUC - you must be joking!

You'll be shocked to know that certain items are priced with at least 50%~100% mark-up as compared with others.

Just make your own comparison.

Anonymous said...

I for one find it a bit hard to take that the current level of inflation is indeed a surprise. It is has been plain for all to see the kinds of injection made by the central bankers all over for the last few years. Then you add the astronomical salary increase as if to counter the future dropping standard of living.
Look I know that you know it ain't so and I know you are not making excuses for others.

Anonymous said...

Maybe we should take a step back and consider what the minister could have said.

In my opinon, the minister had the unenviable job of trying to explain away an inevitable phenomenon in a manner which will appease the citizens.

Inflation is a result of economic growth. Economic theories suggests that when national income increases, unemployment rate falls and the general price level of goods will rise.
Inflationary pressures can only be suppressed by slowing down the growth of the economy, either by reducing interest rates, or by a contractionary fiscal policy.

Basically when the economy growths, inflation is inevitable.

The upside to economic growth is that the income levels of the people will generally increase, thus enabling most to cope with the rising cost of living.

Explaining the economics of it all might achieve the effect of appeasing those who have genuinely felt the increase in income.

But to those have been left behind by the economic growth, what was the Minister to say? Suck it up and get on with life?

The game of politics is one of keeping the electorate happy. In this regard, the Minister could have done no better than to engage in "poltical doublespeak".

While I am too against the many policies of the govt, focusing on Mr Wang's last statement on ministerial salaries appear to me to be missing the main point of his article.

Anonymous said...

zj83, NTUC Fairprice is definitely NOT lowest price guaranteed. I have been doing some checking and NTUC is MORE expensive than other supermarkets in many items although pricing for staple goods are competitive. These days as a consumer we have to do our own 'research' and not just believe in general perception. In fact I will avoid NTUC purely on pricing.

There is one time I was writing down the prices of items at a NTUC outlet and a staff came up and asked what I was doing. She then told me what I was doing is against their rules. LOL

Anonymous said...

No comment.
Anyone knows where to find cheaper goods...?
Actually, maybe solution lah~
1. Buy cup, without handles.
2. Buy car, no buy 4 wheels, 3 can oredi.
3. Buy shirt, no have sleeves one.
Joke joke lah...
No serious hor.


Anonymous said...

It interesting to know that our ministers kept re-emphasizing that our cost and standard of living is low according to world standards n other things r in accordance wif world standard....yet when it come to justify policy (most evident is the ministers salary hike), they dun seem to go accordingly to world standard :P

seems like world standard is a useful, practical words to justify an action or decision (however, solely and can b use by the ruiling party)- Low Thia kiang kana 'fired' by a minister when he compared ministers' salary to their scandinavia counterparts

(which have a much higher cost of living than SG, yet lower civil servant salary)

not gg to NTUC fairprice anymore, still got Sheng siong supermarket near my place. ;-)

Anonymous said...

Sheng Siong, tell the staff that talking down to you is against your rules. Btw, there is no shop in Singapore that sells their goods at the lowest prices except in advertisements and gimmicks!

Make your money here(Sin) and spend it in Malaysia, Bintan, Batam, Thailand and China. It will give you five times or more values.

moomooman said...

Everyone should just refer to Ling's comments above.

She has demonstrated what our minister is saying all along, switch to a cheaper product to lower cost of living.

In this instance, Ling did not even switch to a "cheaper" product, she switched to a "free" product.

And she not only has a lower cost of living but she actually improve her standard of living by not paying to read crap.

Clap clap clap.

moomooman said...

Is NTUC cheaper?

I buy my fresh perishables from the wet-market.

I buy canned food from retailers like Ang Mo/Sheng Shiong

I buy shampoos/conditioners/hair gel from small retailer like Red Tomatoes (you save ALOT)

I buy Electronics Products (yes, they sell them now) from Goh Ah Bee /Parisilk

I didn't switch to a cheaper product to enjoy a lower cost of living.

I switch vendors to improve my standard of living.

NTUC? I go there to compare prices to buy else-where.

Anonymous said...

Inflation is a result of too much money being put into circulation because it benefits some entity but not the overall economy. It is not a result of growth.

You should look at the basis of money and there is your answer. When money was based on something with intrinsic value like gold economies grew without undue increases of the money supply. After all to increase the money supply meant increasing the gold reserves. So in such a situation you had a natural check on inflation.

Now, the fiat system that we have all over the world has consequences one of which is long term un-sustainability and little things like inflation.

Right now we have this but it wasn't always like that. In fact it is only last century that the world reserve currency was floated. There is many more years of the gold standard.

Anonymous said...

Pity the one income family with monthly income of $600+, which is expected to feed 4 mouths or more.

Anonymous said...

What had perhaps contributed partly to the rising cost of living might not all be due to global factors like oil or flour, but also for example GST, higher and higher bids for land and therefore more and more expensive shop and office rentals. As a result food vendors who rented space will have to increase prices.

I think the rental factor is the most serious single factor affecting cost of goods and services. But the Government has for the last two years been coaxing up the property market and laughing all the way to the bank with all the land sales. Singaporeans are waking up to what they meant by more good years and for whom.

Anonymous said...

Some things not to do, that'll definitely lower your cost of living. And possibly the standard of living too.

The objective is twofold:

1) To save money in Singapore, and have your quality life OUTSIDE Singapore, preferably with that pink IC in the garbage bin where it belongs.

2) To not get ripped off by the SG Government, notorious for its avarice and manipulative deceit.

The things not to do are:

1) Buy a car in Singapore. It is a rip-off, with COE, ERP at every corner, Traffic Police and carpark wardens with tight quotas to meet, miscellaneous maintenance and upkeep costs and taxes to pay. Everytime a car sale is made, you literally 'feed' the PAP government. Please do not feed the overpaid monkeys. Don't get me started on the forced scrapping before your car reaches its 10th birthday.

2) Buying a 'highly subsidized' and 'affordable' HDB 'dream home'. Condolences to those newlyweds who most probably had the urge/pressure to buy a pigeon hole, then pay off the loan over a 30-year period. Then along the way, you'll be coaxed into paying for upgrades to PUBLIC housing. Good luck getting ensnared to this sh!thole.

3) Buying 4D/Toto religiously, week after week at the SG Pools outlets. Cluebat time: most likely you won't hit the jackpot, statistically speaking. Your money will once again be used to 'feed' the government. They claim it benefits some charities... most likely a big lie to make punters feel good about losing good money.

4) Fall ill. This is probably largely beyond our control. But still, do what you can to stay healthy and fit. Medical costs will kill you, even from non-private hospitals. Means testing will kill you. MediShield/Save/whatevercrap will not offer much protection. Again, do not 'feed' the government.

5) Avoid NTUC Fairprice for grocery/ household shopping. Don't even take up their membership - NTUC chalet booking discount is a retarded excuse for that. Sheng Siong, Shop and Save, Giant, Carrefour, even Cold Storage for you richer ones. Ignore the NTUC hypermart at AMK Hub - everytime you shop there, you're helping them recoup supermarket venture losses made in China. Avoid NTUC-managed 'Cheers' convenience stores at gas stations.

Follow my tips and you'll avoid feeding the pappies your hard earned money, and survive better each day living on this island. Take heed, and take care.

Anonymous said...

Anonymous at November 16, 2007 12:23PM has said it right.

Rent is one of the key, if not the key factors for rising cost of living in Singapore.

Ask yourself: Who owns the land, be it industrial, commercial, residential, shopping mall land? Is it not the government, either directly or indirectly through closely related subsidiaries in the form of real estate companies?

Who has always pushed for 'upgrading schemes' for say, shops or food sellers, then immediately afterwards hiked the rents, causing the original tenants to either 1) Leave or 2) Raise prices/lower quality?

Where do the rent money go to? Who benefits? Who has the motive for the action? It is too blantantly obvious - if you can't see it, it's because you CHOSE NOT TO SEE IT. DENIAL MODE.

Anonymous said...

Of course in Singapore the CPI or rate of inflation DOES NOT measure the cost of living. It measures the cost of idiotic Ministers.

Sigh! This is, once again, "Uniquely Singapore"

Anonymous said...

The Government owns 90% of all the land in Singapore and this is their best gold mine. Be it for housing, office, shops or factories it is all under their control. And when you buy a car or used their roads, you will be paying more and more for ERP as the years go by.

You think after paying up your HDB flat that is the end of your commitment? No, you will be paying more and more in conservancy charges when the walkways and pavilions needed repairs, and you will have to fork out more and more because they say you asked for it. There is no running away from this reality.

Anonymous said...

Hey, what you people are saying here is your landlord fleecing you like nobody's business. In the words of a believer; the landlord ought to die a terrible death ! Got to wait and see hah, when the day's coming ?

Anonymous said...

He talks better than the birds, only that the birds songs are more pleasing to the ears and soothing to the hearts.

Anonymous said...

Yes. Lower our standard of living. Lower our costs of living.

Let's get cheaper Ministers.

It'll give our nation's funds a HUGE surplus, to spend on US.

Anonymous said...

I want to ask hor Mr Wang.

NTUC inside got many is last time PSC scholar one right? Majiam one big alumni like that. So must be solid one lah.

Why hor, GIANT from Malaysia without scholars can open many stores in Singapore. But NTUC with so many scholars close down in Malaysia (Johor), Vietnam, and struggling in China? Supermarket work must be too low level for their talent.

Anonymous said...

NTUC is what it is today because of the members rebate which was about 8% in the initial years and has now dwindled to 4%. They could not compete in Malaysia and China because of the level playing field in those countries and also because NTUC do not have the benefit of the membership base.

As a member, I do not necessarily buy things from NTUC firstly because the rebates now are miserly. I go where it is cheaper, like Sheng Shiong or Ang Mo and sometimes, Shop n save.

Believe me, certain things work well in Singapore only because the playing field is not level, like politics, and not because we are extraordinarily good.

Anonymous said...

Before I read this posting, I was watching the Youtube video of Ms Chee Siok Chin being forced into a van. I was very sad as a Singaporean and then I saw your post. I now understand why LKY said there is not much talent in Singapore. I saw the Senior Police Officer and I conclude he is not a talent. I saw your posting about Minister Lim and I conclude he is not a talent.
But I think LKY is not looking in the right place for talents. From your posting, you are obviously a talent.
Therefore I am very sad for Singapore because talent is not being used wisely.

Anonymous said...

mr wang you are amazing!!! i get so impressed by your sharp intellect! you wow me beyond words.

Anonymous said...

G S T - Government Salary Tax

Gilbert Koh aka Mr Wang said...

Link - this reader is disturbed by Mr Lim Hng Kiang's comments.