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“Well-off bear biggest brunt of the price increases”

In Economy, Financial competency, Media on 26/01/2012 at 6:13 am

Taz part of a headline in today’s ST.

In the text of the story, it said “the top 20 per cent … were hit by … rate of 5.7 per cent — much higher than the 4.7 per cent for the bottom 20 per cent”.

(ST’s Breaking News reported, “The lowest 20 per cent income group experienced a lower increase in consumer prices at 4.7 per cent, compared to the middle 60 per cent and highest 20 per cent income groups, which experienced CPI inflation of 5.1 per cent and 5.7 per cent respectively.”)

The editors and the two reporters Aaron Low (Econs correspondent) and Melissa Tan obviously don’t know their maths.

Say a poor S’porean is earning $12,000 a year: a 4.7%  inflation rate means he had $564 less to spend in the year on other things. For a rich S’porean earning $600,000, he has $34,200 less to spend.

Whose standard of living or savings rate is affected more? Obviously the poor S’porean, yet ST blithely writes, “Well-off bear biggest brunt of the price increases”.

What can I say?

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  1. You forgot to mention that the stats are likely to be based off different baskets of goods.

    If similar goods are used to tabulate the findings, statistics will show that the lowest income group will be the hardest hit.

    For demonstration, let’s say a the prices of a common basket of goods increase by $100,

    1) Those with an annual disposable income of $12,000 will see a decrease of disposable income by (100/12000) = 0.0083%;
    2) Those with an annual disposable income of $50,000 will see a decrease of disposable income by (100/50000) = 0.002%; and
    3) Those with an annual disposable income of $100,000 will see a decrease of disposable income by (100/100000) = 0.001%

  2. It’s a well thought response to calibrate the perception of income inequality. The message here is “See! It’s better to have less! Those who have more are affected more! So don’t be envious of those who earn a lot ok?!!”

    MSM is meant for mass consumption and it’s unlikely that the masses will be able to see past the numbers for what they really are. Still, MSM’s credibility has been so wasted that it’s losing its edge as a voice.

    There is nothing wrong with income inequality. It’s a natural state of affairs. What’s wrong is extreme income inequality where the masses see their lot in life stagnate or decline while a small group prosper. Many of the decision makers are scholars who were sent to America, so one can see the parallels between the two countries.

  3. What can you say?

    How about “percentages can be misleading without taking absolute numbers into context”? Wonder if the ST reporters are just plain ignorant or were told to report as such by their higher-ups…

    However, if you are Ms Tin Pei Ling, you would of cuz say “I dunno what to say lah…!” *giggle and stomp feet* =P

  4. You got it right. If a poor person spends 30% of his income on food, a 4.7% inflation translates into a hit of 1.41% of his income. A rich person, on the other hand, may spend 3% of his income on (expensive) food. A 5.7% increase in prices is equivalent to 0.171% of his income. So who bears the brunt of the price increases? To make the situation worse, the poors’ income has not kept up with inflation over the years.

    The last couple years witnessed the disproportionate impact of higher food prices on the poor countries. These “economic” reporters need to go back to school.

  5. What can I say … no worries man. Golden Age ahead. Just don’t get caught with your pants down like those 2 superscale jokers.

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