PROFITEERING, INFLATION, CONSUMER PRICES AND EXPENDITURE PATTERNS

Mr Hwang Soo Jin asked the Minister for Trade and Industry and Minister for Health (a) whether the Committee on Profiteering and Inflation is still functioning and, if so, what steps are being taken to ensure that causes within our control are constantly being identified and dealt with promptly; (b) whether the basket of goods and services used for the computation of Consumer Price Index still reflect the current expenditure pattern of the majority of Singapore households, particularly those living in Housing and Development Board estates; and (c) based on the current Consumer Price Index, what is the minimum income required to sustain an average family of four, i.e. parents and two school-going children, living in an HDB three-room flat.

The Minister for Trade and Industry and Minister for Health (Mr Goh Chok Tong): Mr Speaker, Sir, the Committee on Profiteering and Inflation (CPI) meets regularly to monitor changes in prices of essential commodities, examine the causes of inflation, and consider whether and how certain price increases could be moderated. The Committee has met 66 times so far.

Inflation in Singapore is primarily imported. As we are dependent on imports, our domestic prices are influenced by changes in the international prices of energy, raw materials and other imports. We cannot avoid the effects that world inflation will have on our domestic prices. The CPI will, however, moderate such imported inflation by long-term purchases and diversifying sources of supplies of essential commodities such as rice and sugar, whenever possible.

The CPI, together with the Department of Trade, also look out for profiteering practices. The Department will ensure that firms do not restrict supplies of essential commodities to artificially force up prices or to profiteer.

On the second part of the question, the current basket of goods and services used in computing the Consumer Price Index is based on the most recent household expenditure survey conducted in 1977-78. It is representative of nearly 90% of all households in Singapore with monthly expenditures of $100-$1,499. It is also representative of the expenditure pattern of 90% of households living in HDB estates.

The last two household surveys (one conducted in 1972-73 and the other in 1977-78) showed that patterns of expenditure did not differ significantly over the five-year period. The current basket is, therefore, probably still representative of the expenditure pattern of the majority of Singapore households, particularly those living in HDB estates.

It is true, however, that with rising affluence and income, the consumption pattern of Singaporeans will change over time. To provide a more-up-to-date picture of the consumption habits of our population, the Department of Statistics will conduct another household expenditure survey next year.

On the last part of the question, it is difficult to be exact in estimating the minimum income level required to sustain a family as it will depend on many factors, such as individual tastes, age, physical attributes of household members, distance from place of work, and so on. As a rough guide, according to data from the 1977-78 household expenditure survey, a four-person HDB household in that year had an average family income of about $860 and spent an average monthly expenditure of about $707. Allowing for wage and price increases since 1977-78, it is estimated that the average family income would now have been about $1,060 compared to an average household expenditure of about $830.