Written reply to PQ on assessing retail margins during periods of moderated inflation for groceries, food services and household essentials sectors

Question:

Mr Sharael Taha: To ask the Deputy Prime Minister and Minister for Trade and Industry (a) in respect of sectors such as groceries, food services and household essentials, whether the Government has assessed if retail margins have widened during periods of moderated inflation; and (b) what policy levers are available where cost pass-through appears asymmetric. 

Written Answer by Deputy Prime Minister and Minister for Trade and Industry Gan Kim Yong

1.                  When inflation moderated recently, we found no indication of profit margins widening in the retail trade and food & beverage services sectors. For instance, when MAS Core Inflation eased from 4.2 per cent in 2023 to 2.8 per cent in 2024, gross operating surplus as a share of revenue in the retail trade and food & beverage services sectors declined by 0.52 and 0.03 percentage-point respectively over the same period[1].

2.                  The Government adopts a multi-pronged strategy to mitigate any asymmetric cost pass-through by businesses. This includes promoting fair competition, diversifying our import sources to offer consumers more choices, as well as helping consumers to make informed decisions through greater price and information transparency. For instance, the Government worked with the Consumers Association of Singapore (CASE) to develop Price Kaki, a mobile application that lets consumers compare the prices of a wide range of cooked food, groceries and other daily essentials across different operators.

3.                  Should there be evidence of anti-competitive conduct among businesses such as price collusion, the Competition and Consumer Commission of Singapore (CCS) will investigate and take enforcement action against such businesses under the Competition Act. 

[1] Based on data from DOS’ latest 2024 Annual Survey of the Services Sector.