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Saturday, 14 March 2015

Future Inflationary Impact On Our Household Expenses???


How bad without housing inflation?



In Theory, Uncle8888 has projected his future household expenses @ 2.5% inflation rate, his chart will look like this:






















But, in Practice, his actual monthly household expenses for five persons since Oct 2001 is like this:























Blur!

Thinking out!


Without the housing inflation, we can adjust reasonably well to future inflationary impact by varying our consumption and expenditures.



What do you think?




1 comment:

  1. I think daily cost of living in Singapore is too artificially suppressed through incremental participation of foreign labour, retention of elder generation of workers, govt policies and singapore dollar appreciation.

    worldwide inflation target is 2% while developing countries can be 7% (see neighbouring countries and India and china)

    So I think govt did well in this.

    So the real inflation averagely that singaporeans complain about are of inflation of their own expectations barring housing (partial). Necessity of car, maid, weekend restaurant meals, study in starbucks are of own making. I grew up having none of those.

    but there is a noticeable advancement in cities of neighbouring countries over the past 5 years. Incomes grew for China, Thailand, Indonesia etc.
    Transport companies find it harder to recruit new drivers, moving further inland.

    Cafes are popping up in heartland areas. Hawkers are getting older. Taxi starting fares rise from $2.50 in 2007 to $3.90 now. Public transport can only innovate so much (what incentive to innovate if you as an employee are not finding ways to expand businesses for your boss to attract higher pay, you expect other employees to innovate meh?) before finding new ways to collect tax income.

    costs are always inter related. They rise as a whole.

    as long as people have a better life they want to look forward to and there is progress and spending, there will be inflation.

    the reverse is deflation.

    If cash get more valued over time and there is little things out there for me to spend, I will keep my money as it is. No spending no growth no dividends no capital growth.

    my point is singapore has been extraordinarily effective in keeping inflated prices of basics within reach of the average person.

    But it doesn't take much to upset any balance (a shift in monetary policy? Depreciation in SGD? Cap on foreign quota? Restriction on SG FDI in other countries? Min wage imposed by neighbouring countries on workers in singapore?) to shift the balance.

    I would say uncle is extremely wise to factor in a 2.5% long term average for inflation. I prefer 3.5% myself but I am just conservative.

    We had 10% before and we cannot tell what the future holds.

    ReplyDelete

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