The Singapore Retailers Association said retail businesses in Singapore are struggling with high costs due to rising rents and soaring energy prices.
Cost pressures are a major concern for many Singapore retailers, who have not fully passed on the price hike to consumers and are currently feeling “margin squeeze,” the association’s president, Ernie Koh, told CNBC’s Street. said Science Asia on Tuesday.
Singapore utility SP Group said July-September electricity tariffs will increase by about 8% sequentially.
“This increase is mainly due to increased energy costs due to the conflict in Ukraine over rising gas and oil prices worldwide,” SP Group said.
The Treasury said in June that energy prices are likely to remain high in the second half of 2022 and residents should be prepared to stay at high levels before inflation stabilizes.
The Singapore Retailers Association said retail businesses in Singapore are struggling with high costs due to rising rents and soaring energy prices.
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Last month, Deputy Prime Minister and Treasury Secretary Lawrence Wong announced a $1.5 billion support package to provide immediate relief to vulnerable groups and local businesses facing high operating costs.
Koh said the government has responded proactively to the volatile environment and stands ready to help retailers manage their utility bills and rent increases.
Not everyone agrees that higher electricity prices are hitting retailers.
Song Seung Wun, an economist at CIMB Private Banking, said electricity is only a small part of rising costs for retailers.
He said rent, labor costs and utilities have all gone up, and it’s “affecting everyone,” including retail businesses. “As far as energy costs go for retail establishments, it’s just electricity to turn the lights on and off. So we see that this is just a small part of the total cost,” Song said.
Retail sales growth
Despite the current inflationary outlook, Singapore retail sales rose 17.8% year-on-year in May, compared with a 12.1% increase in April, according to data from the Department of Statistics or Singstat.
According to Singstat, retail sales excluding autos rose 22.6% in May, compared to a 17.4% increase in the previous month.
All the tourism and travel coming back is clearly helping to boost consumption in Singapore.
Brian Tanu
Chief Economist, Barclays
Brian Tan, senior economist at Barclays, said: “It’s not too surprising that we’re seeing such strong demand.”
He said the demand for spending cuts came from tourists rather than Singaporeans.
“All the tourism and travel that’s coming back is clearly helping to boost consumption in Singapore,” Tan said.
He dismissed suggestions that this was due to “revenge spending” by Singaporeans, adding that “it doesn’t make sense anymore” as demand has increased as they have been able to buy these goods for the past six months anyway. were able.
Department stores, hit hard by COVID-19 restrictions in 2021, saw sales rise 73.1% as consumer confidence returned. However, sales at supermarkets and hypermarkets fell 10.3% due to higher demand for groceries in May 2021 when residents stayed at home, Singstat reported.
Vehicle sales fell 10.2% yoy and 5.7% mom.
According to Tan, this is mainly due to the rising cost of car ownership. Aside from paying for the car, car owners must also pay for the license, known as a Proof of Entitlement. According to local reports, the COE of a number of cars hit a record high of S$110,524 ($78,820) this week – beating the previous high of 1994.
Although sales of furniture and appliances increased 4.7% year-on-year, they fell 1.7% month-on-month.
“If you think about the last two years, a lot of the demand in this space has been because people have been forced to work from home and study from home,” Tan said. “Now that they’re all going back into the office and people can travel, there’s probably a little less demand for it.”
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