Examining the Cost Drivers of Hawker Food Prices
Hawker centres are an integral part of the Singaporean way of life, offering a wide selection of affordable food to Singaporeans in a clean and hygienic environment. This study looks at the cost structure of hawker stalls and examines the relationship between the various cost components and hawker food prices.
We find that the largest cost component for hawker stalls is raw material costs, which account for 59 per cent of their total costs on average. Manpower and rental costs represent the second and third largest cost components, accounting for much smaller shares of 17 per cent and 12 per cent of total costs respectively.
Our findings suggest that hawker food prices are affected by a range of factors. Regression analysis shows that an increase in the cost of raw materials is associated with a larger increase in hawker food prices than an increase in rental costs. Demand factors also appear to influence the extent of passthrough from rentals to hawker food prices. Lastly, we find evidence that competition dampens hawker food inflation.
The views expressed in this paper are solely those of the authors and do not necessarily reflect those of the Ministry of Trade and Industry (MTI), the Ministry of Environment and Water Resources (MEWR), or the Government of Singapore.
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