Opinions have heated up of late over the prices of hawker food.

The Makan Index 2.0 by the Institute of Policy Studies (IPS) aggregated food prices in hawker centres, food courts, and kopitiams. 

It found that the prices of certain hawker food items increased by a few cents to just under 30 cents between two data collection periods in late 2022 and early 2023. 

This has attracted public scrutiny on the accuracy and the implications of the data. After all, price increases are unavoidable, even as we worry about shrinkflation — referring to the practice of reducing the size of a product while maintaining its price — and rising living costs.

WHAT DOES THE INDEX REALLY SAY? 

The first round of data collection, conducted between September and November 2022, covered 829 food establishments in the 26 most populous heartland neighbourhoods in Singapore. 

The second round of data collection, conducted between January and February 2023, revisited 50 randomly selected food establishments across Singapore, out of the original 829. 

The aim of the second round was to check what price increases had occurred in the three preceding months, given the focus on rising costs then.

Notably, price increases were found for several food and drink items. All five of the drinks surveyed — kopi-o, kopi, iced Milo, iced lime juice, and canned drink with ice — recorded statistically significant price increases of between 3 cents and 12 cents.

Meanwhile, eight of the 13 surveyed food items — the breakfast set, chicken rice, economic rice, wanton noodles, fishball noodles, sliced fish soup with rice, one plain and one egg prata, and chicken chop — also recorded statistically significant price increases ranging from 5 cents to 28 cents. 

Some may argue that the increases seem too small, especially when personal experiences or recounted anecdotes indicate more drastic increases. However, the data must be read in context. 

GROWING 'SHRINKFLATION'?

First, the report presented the average price increases for different food and drinks observed across the revisited locations. 

It aggregated individual observations of price increases into a single number, tracking the overall degree of price increases. 

Therefore, these averages were likely lower than what personal observations might have suggested. 

Second, “shrinkflation” may have occurred, with stalls reducing serving sizes to keep prices low. 

However, food prices were recorded at face value for this study and the quality and quantity of food were not considered.

Third, the study could not and did not seek to measure price increases before September 2022. 

While the first round of data collection sought to obtain a database of food prices in residential neighbourhoods, the second round was primarily a check on price increases during the intervening period, especially for the initial responses to the Goods and Services Tax (GST) hike on Jan 1, 2023. 

One may argue that since the GST hike was conveyed to the public much earlier, hawkers could have pre-emptively raised their prices, especially in response to rising costs from the Russia-Ukraine war. 

This is highly probable, and anecdotal accounts seem to corroborate this. But these accounts also show that price changes do not happen all at once, so price increases after the GST hike was implemented should also be expected. 

The results of the second data collection exercise, while limited to a fraction of the establishments initially visited, demonstrated this, with prices raised by up to 7 per cent after the GST hike. 

VOLATILITY OF FOOD PRICES 

In fact, these revisits reveal the volatility of the food market in Singapore. They show that food prices can rise rapidly within three months. 

Beyond rising prices, hawker businesses may fall instead.

In the 50 revisited food establishments, there were initially 354 stalls with price observations. However, by the second data collection exercise, 70 of these stalls may have closed permanently or changed hands. 

No prices were recorded for these 70, excluding them from the calculation of the average price difference between the two periods. 

While there are many explanations for why stalls close, it is highly possible that some were overwhelmed by operating costs, such as rising rental and ingredient prices. 

This raises the uncomfortable question: Are current hawker prices sustainable? 

Price increases are par for the course given rising inflation rates and other cost pressures. After all, stall owners are running a business — they need to cover their costs and pay their workers and themselves. 

In fact, some, like food critic KF Seetoh, have argued that the current prices found in these food establishments are unsustainable. After all, if workers in other industries expect their wages to increase in tandem with inflation, we should expect hawkers to expect the same. 

But there seems to be more unhappiness over rising hawker food prices than rising food prices at chain restaurants or higher-end food establishments, despite hawker food remaining the most affordable option even with the increased prices. 

SOME FOOD FOR THOUGHT 

Of course, rising food costs are understandably troubling, especially for hawker food, whose affordability has been a source of national pride. 

Moreover, the affordability of hawker food allows many earning lower incomes to enjoy regular, hot meals. If these prices rise too much, more of our vulnerable demographics may have to skip meals. 

However, this issue cannot be solved by hawkers keeping prices low in altruism. It will require a search for more sustainable solutions at the structural level to keep the country’s poor regularly fed. 

The findings from the Makan Index 2.0 can help to provide some evidence-based arguments for such solutions. 

With the average expenditure for eating out three meals a day at S$16.89 — nearly S$17 for an individual — it costs S$506.70 for a month of 30 days. This is about one-quarter of the salary of someone earning S$2,000 a month. 

Even though eating out is common in Singapore, such expenses may be unsustainable for individuals on these salary scales, just as it is unrealistic to expect hawker prices to remain low. 

Therefore, even as we revise our expectations for hawker prices, it is important to consider how to help real wages, especially those at the lower end, rise in tandem with living costs.



Dr Teo Kay Key is a research fellow at IPS Social Lab of the Institute of Policy Studies, National University of Singapore. Hanniel Lim and Mindy Chong are research assistants at the same Institute.

This piece was first published in TODAY on 29 March 2023.

Top photo from Freepik.