Cost Of Living Analysis

“To what extent does the ECPI in Singapore reflect the cost of living in my household?”

In this essay I shall answer the research question:
“To what extent does the ECPI in Singapore reflect the increasing cost of living in my household?”
I will be evaluating the accuracy of a consumer price index in documenting the changing cost of living in my household, while comparing the two different baskets of goods relating to contrasting demographics.

The scope for my investigation is limited to Singapore as an economic country, and to my household of six. I touch upon the comparisons with other countries

TABLE OF CONTENTS

1.0 INTRODUCTION 4

2.0 APPROACH 4 2.1 Measuring Inflation 4 2.2 Methodology 7
Inflation is caused by two means, namely demand-pull inflation and cost-push inflation. Demand-pull inflation occurs when there is a supply deficit in an economy. Most commonly, this type of inflation is caused by overall economic growth which leads to a population having more disposable income and thus, greater aggregate demand. Aggregate demand is the total amount of goods and services demanded in the economy at a given overall price level and in a given time period. In Singapore, this occurred when labour market wages saw a hike; a large proportion of the Singaporean population work in the labour force which is inclusive of full-time national servicemen - a mandatory two-year enlistment for all males aged 18-21. Cost-push inflation relates to the increase in price level when goods or services become scarce and thus see excess demand force prices up. An example of this is is the oil crisis of the 1970’s, which is said to be a main contributing factor to the high rates of inflation in Singapore during that
In an ideal economy, median incomes are expected to increase at the same rate, or faster than the cost of living to avoid real income losses.

2.0 Approach

I will conduct, analyse and evaluate a range of primary and secondary research in order to answer the question. I will also acquire a range of information pertaining to the subject on a general level, and more specifically to Singapore. I will develop my own index to document inflation in my household and use that to contrast and/or

2.1 Measuring Inflation

a) Consumer Price Index (CPI)

Inflation in an economy is most commonly measured using the Consumer Price Index (CPI). The CPI is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. It is used to show the change in average price level of a basket of consumer goods and services that are typically purchased by a