Inflation coming to hit us hard.

[noobcarbuyer]

17 minutes ago, Voodooman said:

Inflation is really a tax on retirement saving. The adequacy of CPF will be called into question if CPF interest rate falls too far behind inflation.  6 months won't make a dent. 

Let's hope that this talks in some quarters that high inflation (due to demographic factors) is here to stay is not true. 

https://www.forbes.com/sites/randybrown/2021/09/13/retiring-boomers-could-drive-an-inflation-shift/?sh=23cdfc78426a

Well said. Tharman warned about this back in March 2022. 

https://www.mas.gov.sg/news/speeches/2022/responding-to-a-perfect-long-storm

"I don't think 20 or 30 years from now, we will regard this inflation risk itself as the most serious problem of the current period, compared to the rupture in international order, and the setbacks we're facing in addressing the global commons. But inflation is not a trivial problem. Again, we are in a different situation from 1973. Populations were young then. Now you have a large part of the advanced world’s populations that are older. Middle aged workers tend to have wages that tend to stay flat, and a large part of the retiree population is on fixed nominal incomes. 5-6% inflation can be a very demoralising experience for populations and will complicate the task of governments to rally support for the types of initiatives, the taxes, the carbon pricing that is required to address the larger challenges we face. So it's not that inflation in itself at 5-6% is the biggest problem. It is the social and political implications, the implications for the political capital that is required for nations to address the larger challenges."

[BanCoe]

51 minutes ago, inlinesix said:

 

Stagflation + Depression => see RADX

FOC or must money (hell $$ type i tink he accept) 

[Kopites]

1 hour ago, Fcw75 said:

At the expense of average citizens like us lor.

High new worth individual like Su Zhu? 😁

https://www.scmp.com/week-asia/economics/article/3183006/singapore-lures-new-wave-chinese-investors-eyeing-good-schools

Not too far off from what I have read months ago. 😁

Tightening for high net worth only. 

[Fcw75]

22 minutes ago, BanCoe said:

FOC or must money (hell $$ type i tink he accept) 

Heard he accept PayHell. 🤣

[Volvobrick]

42 minutes ago, noobcarbuyer said:

Well said. Tharman warned about this back in March 2022. 

https://www.mas.gov.sg/news/speeches/2022/responding-to-a-perfect-long-storm

"I don't think 20 or 30 years from now, we will regard this inflation risk itself as the most serious problem of the current period, compared to the rupture in international order, and the setbacks we're facing in addressing the global commons. But inflation is not a trivial problem. Again, we are in a different situation from 1973. Populations were young then. Now you have a large part of the advanced world’s populations that are older. Middle aged workers tend to have wages that tend to stay flat, and a large part of the retiree population is on fixed nominal incomes. 5-6% inflation can be a very demoralising experience for populations and will complicate the task of governments to rally support for the types of initiatives, the taxes, the carbon pricing that is required to address the larger challenges we face. So it's not that inflation in itself at 5-6% is the biggest problem. It is the social and political implications, the implications for the political capital that is required for nations to address the larger challenges."

That's why Fed Reserves got to chop chop increase interest rates and Democrats will likely lose the coming mid terms....

Here? No problem - we will increase GST to help you!

[Fcw75]

3 minutes ago, Volvobrick said:

That's why Fed Reserves got to chop chop increase interest rates and Democrats will likely lose the coming mid terms....

Here? No problem - we will increase GST to help you!

Last time round GST is to help the poor. This time round GST is to help the elderly.

I guess the next time will be to help the elderly poor.

[inlinesix]

8 minutes ago, Volvobrick said:

That's why Fed Reserves got to chop chop increase interest rates and Democrats will likely lose the coming mid terms....

Here? No problem - we will increase GST to help you!

With chances of tanking the Economy

[Volvobrick]

34 minutes ago, Fcw75 said:

Last time round GST is to help the poor. This time round GST is to help the elderly.

I guess the next time will be to help the elderly poor.

When increasing from 9% to 11%! I see you have potential for the top job in Sg!

[inlinesix]

Just now, Volvobrick said:

When increasing from 9% to 11%! I see you have potential for the top job in Sg!

It will be 10 years after the increase to 9%.

[RadX]

1 hour ago, BanCoe said:

FOC or must money (hell $$ type i tink he accept) 

PayHELL pls

 

we have upgraded 👹

[Jamesc]

30 years time inflation is not the biggest problem.

Its the environment lah.

We will all be hot and bothered about it.

[BanCoe]

3 hours ago, Jamesc said:

30 years time inflation is not the biggest problem.

Its the environment lah.

We will all be hot and bothered about it.

But She will survive 🤣🤣Earth Wind Fire and in her case Water too 

Edited July 7, 2022 by BanCoe

[Stratovarius]

Say goodbye to subsidised rides, meal deliveries and cheap home loans
https://www.straitstimes.com/opinion/rethinking-the-cost-of-convenience

 

[Throttle2]

Song ah!

 

[13177]

2 hours ago, Stratovarius said:

Say goodbye to subsidised rides, meal deliveries and cheap home loans
https://www.straitstimes.com/opinion/rethinking-the-cost-of-convenience

 

Aiya, cannot read the full article since not subscriber. 😂

[Throttle2]

2 hours ago, 13177 said:

Aiya, cannot read the full article since not subscriber. 😂

No need to read full also know how song it is…..

 

[Volvobrick]

4 hours ago, Stratovarius said:

Say goodbye to subsidised rides, meal deliveries and cheap home loans
https://www.straitstimes.com/opinion/rethinking-the-cost-of-convenience

 

Hurray! Less PHVs and PMD/ebikes on the road. Cheaper properties.

[Stratovarius]

10 hours ago, 13177 said:

Aiya, cannot read the full article since not subscriber. 😂

Say goodbye to subsidised rides, meal deliveries and cheap home loans

 

Grace Ho

Opinion Editor

Recent sticker shocks have especially forced the digitally savvy to reconsider the cost of convenience. ST PHOTO: LIM YAOHUI

PUBLISHED

 

JUL 7, 2022, 5:00 AM SGT

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A few weeks ago, I pulled up a ride hailing app on my phone, blanched at the high fares and, for the umpteenth time this year, decided not to make a booking.

A taxi or car ride from my home to a meeting venue would've cost around $27. But it was impossible to find a driver for either option at that hour, which meant forking out at least an extra $7 for a premium ride.

Recent sticker shocks from transport to food to housing have hit everyone. But they have especially forced the digitally savvy - who rely heavily on apps to make their lives easier - to reconsider the cost of convenience.

Too lazy to walk to the hawker centre? Didn't want to spend an afternoon browsing the aisles at the supermarket? A few taps on the phone and, almost like magic, food appeared on our doorsteps.

It wasn't too long ago that we zipped around the island at a fraction of today's prices.

A young acquaintance, who earned just over $4,000 a month, sheepishly admitted to taking a private-hire car to and from home every day. He could not bear the thought of an hour-long commute in a packed MRT train, he said, even if the alternative meant living on a financial knife-edge.

That knife-edge has turned into a knife wound, as prices spike in ways unseen since the 1970s when advanced countries saw their last bout of high inflation.

May's core inflation - which strips out accommodation and private transport costs and is more representative of the bills the average Singaporean pays - hit 3.6 per cent, the highest core inflation rate that Singapore has faced since December 2008, when it hit 4.2 per cent.

With private transport and accommodation inflation expected to hold firm in the near term, headline inflation - which hit 5.6 per cent in May - will pick up more than core inflation this year, said the authorities.

Inflation in both advanced and developing economies can be attributed to a cocktail of supply constraints, a demand shock and a surge in oil prices, the World Bank said in a report on global economic prospects released last month.

Subsidised lifestyles

Throughout the 2010s, start-ups were effectively paying us to buy their products.

We, the consumers, naively thought that it would last forever: subsidise unprofitable rides with venture capital (VC) money, give deep discounts in order to gain market share, and pray that the model will eventually become profitable.

Amid a low interest rate environment, investors were eager to place their bets on the next unicorn whose outsized returns could cover every other loss-making venture.

They encouraged start-ups to expand aggressively, even if that meant burning cash on new consumers to grow their user base.

But the momentum has fizzled. Fund-raising has slowed sharply compared with the second half of last year, and fewer start-ups are "exiting" - VC lingo for being listed or sold to other investors.

As the economy rebounded and countries relaxed restrictions, customers returned but drivers did not come back in the same numbers, pushing up fares and wait times.

In Singapore, some drivers became inactive due to a lack of passengers during the pandemic. When higher fuel prices started to eat into their takings, some drove less or not at all.

Companies such as Grab, Uber and Lyft have imposed new fees on riders to help drivers.

It's a tricky move since ride hailing is a highly price-sensitive business, and alternatives such as walking, biking, public transport or personal vehicles are widely available. The price hikes have turned away some customers.

According to market research firm YipitData, Uber and Lyft collectively drew at least 20 per cent fewer riders and posted 35 per cent fewer trips in the first quarter than three years earlier.

But the lower prices of yesterday came on the back of weak labour markets. This was great for consumers, but not such a great deal for gig workers.

On a positive note, the price adjustments today reflect these workers' rising nominal wages and alternative job options.

Show me the money

Are the online-shopping, latte-sipping bourgeois yuppies of my generation finally getting some kind of financial comeuppance?

As it turns out, millennials spend their money largely on the same things - utilities, food and housing - as anyone else.

Ascribing an entire generation's money problems to Starbucks and avocado toast was always going to over-simplify the systemic problems they face.

Studies by the Pew Research Centre in the United States show that millennials hit hard by the global financial crisis were somewhat slower in forming their own households, compared with previous generations who enjoyed looser property rules and steady asset appreciation.

According to the US National Bureau of Economic Research, workers experience 70 per cent of their total career wage growth in their first decade of work, and it takes 10 years to recover from a setback like a recession.

This means that many were just getting back on track from the shock of 2009 when Covid-19 struck, hitting those entering their peak earning years especially hard.

Ascribing an entire generation's money problems to Starbucks and avocado toast was always going to over-simplify the systemic problems they face. PHOTO ILLUSTRATION: UNSPLASH

Others lost their pants in the recent cryptocurrency meltdown.

To them, crypto wasn't just about Fomo (fear of missing out), or being so gullible as to buy into actor Matt Damon's confident pronouncement in a Crypto.com advertisement that "fortune favours the brave".

Instead, it represented low barriers to entry in a world where growing one's wealth has become harder. One might not have $100,000 to make a housing down payment like mum and dad, but with $10 one can own a fraction of a Bitcoin.

One might not have six- or seven-figure sums to splash on traditional investments, but in crypto, retail investors have opportunities to contribute to and earn value from early-stage crypto projects the same way venture capitalists do.

No soft landing

Meanwhile, the 0.75 percentage point rate hike by the US Federal Reserve, the biggest increase since 1994, will translate into upward pressure on interest rates here, raising the costs of all kinds of borrowing from mortgages to credit cards to car loans.

The revised interest rates for bank loan packages are already higher than for loans from the Housing Board, which has been charging an annual rate of 2.6 per cent for more than two decades.

Banks' home loan rates have shot past 3 per cent to a new high, beating the previous high of 2.88 per cent in mid-2019.

Not only do people have to contend with weaker real purchasing power, but higher borrowing costs and tighter financing conditions can hit asset prices, hurt confidence and weigh on leveraged households.

Consumer confidence in the US, for example, has turned sharply negative, with Gallup's economic confidence index now at levels last seen during the 2009 crisis.

The Bank for International Settlements has warned of an "inflationary psychology" which could become entrenched.

Consumer confidence in the US has turned sharply negative. PHOTO: REUTERS

Sounding a similar note, European Central Bank president Christine Lagarde said: "I don't think we are going to go back to that environment of low inflation... There are forces that have been unleashed."

More interest rate hikes this year could tip the US economy into a recession.

Federal Reserve chairman Jerome Powell acknowledged this explicitly on June 22, when he called recession "possible" and a soft landing "very challenging".

Real-time evidence is accumulating of a slowdown that is under way. In the US housing market, mortgage applications to purchase a home are now down more than 20 per cent compared with last year.

High-yield corporate bond spreads, which are proxy for recession risk by measuring the chance of default and difficulty of borrowing for the riskiest companies, are higher than at any point between 2017 and 2020.

Some analysts point to signs that short-term inflation may be rolling over, such as consumers spending down their excess savings, falling commodity prices and rising real rates. But what is uncertain is how the different recessionary forces will interact, how rapidly inflation comes down and how hard the economy will land.

Living on the cheap

As an era of subsidised consumption draws to a close and we face the true (and rising) cost of things, what can we do?

At the individual level, I can think of nothing earth-shaking, just small steps to ease the pain.

My ride hailing app-addicted friend, for example, could swop out a few car rides each week with the bus or MRT.

Try cooking at home, or walking to the hawker centre instead of paying $20 for chicken rice delivered during peak hours.

Try cooking at home, or walking to the hawker centre instead of paying $20 for chicken rice delivered during peak hours. ST PHOTO: FELINE LIM

Cut back on discretionary expenditure such as overseas holidays. Trim unnecessary recurring subscriptions, and review existing insurance policies and mobile plans which may exceed one's needs.

Across the world, people are reacting in anger to price shocks.

Statistical modelling by The Economist has shown that rises in food and fuel prices are a strong portent of political instability, even when controlling for demography and changes in gross domestic product.

Faced with sagging growth, squeezed living standards and greater volatility, policymakers must step up decisively to not just protect the most vulnerable segments of society, but also limit damage to the broad middle. Not doing so would be a recipe for economic and political disaster.

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MCI (P) 031/10/2021, MCI (P) 032/10/2021. Published by SPH Media Limited, Co. Regn. No. 202120748H. Copyright © 2021 SPH Media Limited. All rights reserved.