DBS Study: Singaporeans Are Spending More But Struggling To Keep Incomes Up

A study by DBS bank reveals that consumers are spending more relative to their income. According to the latest survey of 1.2 million retail customers by DBS Bank, expenses have now outpaced income growth by roughly two times. While the overall monthly expenses of customers grew 22.2 per cent in May this year compared to a year ago, the rate of their income growth of 11.1 per cent in the same period.

Moreover, 40 per cent of DBS customers are not keeping up with inflation, highlighting that low-income individuals and baby boomers are particularly vulnerable. Customers within the lowest-income group, who earn below S$2,500, had just a 2.5 per cent increase in income between May last year and this year. This group also saw their expenses grow 13.8 per cent, which is 5.6 times faster than their income growth at 2.5 per cent. This is partly attributed to inflation and pent-up spending over the past year.

During a media roundtable, Irvin Seah, senior economist at the DBS bank, attributed this to pent-up spending over the last year and inflationary effects. He said, “If inflation continues to stay high, obviously, this group (the lowest-income group) will continue to feel the strain. I think it is important for all Singaporeans to exercise sustainable financial planning and investing.”

Where Are They Spending?

The DBS study showed that the cost of living here had gone up, with its customers now spending 64 per cent of their income — 5 per cent more than what they were spending a year ago.

Related: New Study On Asia Lifestyle Consumer Reveals Five Main Consumer Personas

In terms of spending patterns, there was double-digit growth last year. People were spending a lot more on transport, shopping and food. The growth rate for transport expenses was 60.2 per cent, and discretionary spending — which includes shopping, entertainment and travel — saw a sharp 56.7 per cent growth rate. For food, it was at 38.7 per cent.

Seah went on to add, “From one regressive event to another, it seems like the odds are stacked against the financial well-being of Singaporeans. With inflationary pressures creeping up, slow wage growth and a growing propensity to ‘revenge-spend’, low-income earners are especially vulnerable to the ill effects of the current economic situation.”

The DBS study showed that the three key drivers of inflation in Singapore were food, transportation, as well as housing and utilities. Together, these three components accounted for around 63 per cent of the overall basket of spending.