The Consumer Price Index (CPI) measures the average prices increases for a fixed basket of goods and services that Singapore households commonly purchase. That’s why the CPI can be thought of as a proxy indicator for the cost of living in Singapore.
It’s worth noting that the CPI was recently rebased using 2024 as the “reference period” – instead of 2019 previously. The 2024-based CPI was derived from the expenditure patterns and values collected from the Household Expenditure Survey (HES) 2023 – after accounting for price changes in 2024.
In this article, we look at 4 ways Singapore households are spending their money differently in 2024 compared to 2019 – when the last CPI rebasing was done.
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#1 More Than 70% Of Expenses Go On Housing & Utilities, Food, Transport And Health
The bulk of household expenses, or 72.9% of how much we are spending each month, goes towards Housing & Utilities, Food, Transport and Health.
Looking at the weighting pattern, we can also see that Housing & Utilities recorded the largest price increase compared to 2019 – rising from 24.8% to 29.4%. This was a result of a larger share on Accommodation, which includes Imputed Rentals for Housing and Actual Rentals for Housing. The Imputed Rentals for Housing reflects the estimated rental value that homeowners are paying to live in their homes – almost like if they were paying rent to themselves.
Source: Rebasing of Consumer Price Index (2024 as Base Year)
While expenditure on Food dipped slightly, it still accounted for over a fifth of household expenses. Transport saw the largest price decline – from 17.1% in 2019 to 13.1% in 2024. This primarily reflected lower spending on Motor Cars by Singapore households – which we look at in greater detail in the next point below.
Health was one of the expenses that spiked, accounting for just 6.5% of our household expenses in 2019, compared to 10.1% in 2024. According to the report, this was mainly due to higher expenditure on Inpatient and Outpatient Care Services, as well as Health Insurance.
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#2 Total Spending On Motor Cars Dropped, Despite Higher Prices
As mentioned, the 2024-based CPI shows that households spent just 13.1% of their expenses on Transport. Looking at the breakdown of the figures, we can also see that households spent about 4.6% of their monthly expenses on Motor Cars in 2024, compared to over 7.4% in 2019.
Obviously, this is not because it became cheaper to buy a car in Singapore. Instead, this is a reflection of how the rebasing works. With the reduction in Certificate of Entitlement (COE) quotas, from 72,000 in 2019 to 43,000 in 2024, fewer households were buying cars. Hence, the average household was spending less on Motor Cars, despite the uptrend in COE premiums and car-related taxes in recent years.
Similarly, a lower expenditure share was also recorded for Petrol, despite prices going up in recent years.
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#3 CPI Measures Price Changes And Not Actual Prices
We may think that the average households may be spending less on certain products just because the CPI dipped.
Going back to the point earlier on the drop in household expenditure on cars, just because the CPI dipped, it does not mean that the absolute prices dropped. It could mean shifting demand, due to lower COE quotas, despite higher prices for Motor Cars.
While it is true that average households may be spending less on Motor Cars in the above example, the opposite may also be true – that households may be spending more despite the CPI dropping.
We can reference the Household Expenditure Survey 2023 to see that the average household spent $5,931 in 2023, about 15% more compared to $5,163 in 2019.
Source: Household Expenditure Survey 2023
This means that households can allocate a smaller share of expenditure to certain items, but still spend more on it. For example, the average household spent 14.3% of their household expenditure on eating out (i.e. Food & Beverage Serving Services such as Restaurants, Cafés, Fast Food Restaurants, Hawker Centres and others). This works out to $738.31 based on the 2019 CPI.
Based on the 2024 CPI, households may only allocate a lower proportion of 13.9% of the household expenditure on Food & Beverage Serving Services. However, this may work out to a higher sum of $825.
#4 CPI Will Never Have A Uniform Impact Across Households
Finally, we should also understand that CPI reflects the collective expenditure experience for all households in Singapore – and will impact individual households differently.
For example, a household that comprises an elderly couple may be more heavily impacted by changes in healthcare costs compared to a household that comprises a young working adult couple without children. Similarly, the young working adult couple may be impacted more by price changes in Recreation, Sports and Culture expenditure.
Preferences may also play a part in differing expenses. For example, the CPI may collect prices from different stalls and average them across the product. However, price differences across the stalls will be felt by the actual customers of each stall.
In the example below, the CPI would register an average increase of 4% in coffee prices – from $1.40 to $1.45. However, based on the actual stalls that a customer buy from, the difference in coffee prices will not be uniform – and it could be as high as going from $1.40 to $170, or even dipping from paying $1.40 to $1.20.
Source: Rebasing of Consumer Price Index (2024 as Base Year)
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