Retailers in Singapore are struggling with higher costs as rents rise and energy prices soar, said the Singapore Retailers Association.
Ernie Koh, the association’s president told CNBC. Asian street signs Tuesday.
Singapore Utility Company SP Group announced that electricity prices will increase increased about 8% quarter-on-quarter from July to September.
“The increase is mainly due to higher energy costs as a result of rising global oil and gas prices as the conflict in Ukraine is exacerbated,” SP Group said.
Energy prices are likely to continue to rise in the second half of 2022 and people should prepare for continued high inflation before it stabilizes. Ministry of Finance said in June.
Retailers in Singapore are struggling with higher costs as rents rise and energy prices soar, said the Singapore Retailers Association.
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Last month, Deputy Prime Minister and Minister of Finance Lawrence Wong announced a support package of 1.5 billion USD provide immediate relief to vulnerable groups and local businesses that are facing higher operating costs.
Koh said the government has been proactive in responding to the volatile environment and is ready to help retailers manage electricity bills and rent increases.
Not everyone agrees that high electricity prices are impacting retailers.
Song Seng Wun, economist at CIMB Private Bank, said electricity only contributes a small part to retailers’ rising costs.
He said rent, labor costs and utility charges have also increased, and it is “affecting everyone” including retail businesses. “For retail businesses, in terms of energy costs, it’s just electricity to turn the lights on and off. So we see that’s only a small percentage of the total cost,” Song said. more.
Retail sales increase
Despite the current inflationary backdrop, May retail sales in Singapore increased by 17.8% year-on-year, compared with April’s 12.1% increase. according to data from the Bureau of Statistics, or SingStat.
Excluding motor vehicles, retail sales rose 22.6% in May, compared with a 17.4% increase in the previous month, SingStat said.
All travel and tourism coming back is clearly helping to boost consumption in Singapore.
Brian Tan
senior economist, Barclays
“It is not surprising that we see such a dramatic increase in demand,” said Brian Tan, senior economist at Barclays.
He thinks the pent-up demand in spending is coming from tourists, rather than Singaporeans.
“All travel and tourism coming back is clearly helping to boost consumption in Singapore,” said Tan.
He dismissed suggestions that it was due to “revenge spending” from Singaporeans, and said it “doesn’t make sense” for demand to be pent up now, as they can still buy things. the goods in the past six months.
Department stores hit hard by Covid-19 restrictions in 2021 saw sales increase 73.1% as consumer confidence rebounded. But supermarkets and hypermarkets saw a 10.3% drop in sales due to higher demand for groceries in May 2021 as people stayed home, SingStat reported.
Motor vehicle sales fell 10.2% year-over-year and 5.7 percent month-on-month.
This is mainly due to the rising cost of car ownership, Tan said. In addition to paying for the car, the car owner also has to pay for the ownership license, known as the Certificate of Interest. COE for one type of car hit a record high of S$110,524 S$78,820 this week – surpasses the previous high in 1994, according to local report.
Although sales of furniture and home appliances grew 4.7% year-over-year, they fell 1.7% month-on-month.
“If you think about the last two years, a lot of the demand in the industry is because people are forced to work from home and study from home,” said Mr Tan. “Now that they’re all back in the office and people can travel, maybe the demand will be a little bit less.”
