Subsistence Costs

I was having lunch at a food court in a prominent mall in Singapore yesterday.

I could not fail to notice the cost increases which were getting passed to the ordinary customers. The people you see at a mall are the microcosm of the country itself – mostly average consumer, trying to eat out on a weekend, along with his family. They do a multitude of activities at their chosen mall – ATM transactions, window shopping, getting things fixed, hair cut, real shopping, casual shopping, et al – but the most important thing they execute is having lunch or coffee or dinner. Simply because they do not cook and do not wish to work during the weekend making lunch or dinner, I guess.

The prices of ordinary food articles/items have gone up by over 30 to 40% in Singapore – same is the case in most other places, but here the contrast was remarkable. We all know that subsistence costs are a lower percentage of discretionary expenses in more developed countries, as compared to the “developing” or “emerging” countries. What this means is that, food costs for example, are lower in developed countries (it should be the other way around, if you care to think about it !). However, with incomes falling, employees getting laid off by companies which cannot successfully tackle the economic downturn, zero pay increases, etc., the food costs become a bigger proportion of income/expenses.

That is at constant food prices. If the food prices rise, for whatever reason, you can imagine the impact. I am sure that this factor has had a big impact in the lives of Singaporeans, especially in 2008 – 09.

I noticed the cost that affected me. For a simple lunch of “Yong Tau Fu” which consists of a few selected vegetables/taufu/greens + noodles, cooked in hot water right in front of you, it used to cost around S$ 3.80 in yesteryears. Now, I had to pay S$ 5.30, an increase of 40%. Well, I am not incorrect to say that there has been a significant increase in the cost of food in Singapore.

Well, let us look at the formal restaurants – last evening I went to dine at a classy one in downtown. A dish which should typically cost S$ 16 was priced at S$ 24, an increase of 50% ! May be the upper middle class can bear a little more burden, I guess.

Well, whichever way I looked around, it made me wonder how the average Joe is coping. It should be pretty hard, I think.

I decided to take a walk around the shopping mall, and read the sticker prices of some items on display. I always thought that Mumbai was costlier for almost everything, especially electronic items. Was I shocked ? Yes, I found that the price of iPod Nano in the Apple Store at Singapore was around US$ 15 more as compared to the same model at the Apple Store in Mumbai ! May be the rapidly appreciating Indian Rupee is playing some tricks here, or the relative strength of the S$ vis-a-vis the US$ is having some impact. Don’t know, but it was surprising.

Well, well, Singapore needs to once again re-learn the art of being competitive. It is a country which has constantly re-engineered itself over the past four decades, and I am sure it would do so again.

It was interesting to see the impact, though.

Cheers,

Vijay Srinivasan

25th October 2009

Mumbai