High savings level of S'poreans a buffer against inflation: Experts

This is despite 5.9% contraction in personal savings in second quarter

- Chor Khieng Yuit

Inflation has pushed up the cost of living in Southeast Asia but financial watchers say most Singaporeans are in good financial shape, with their high level of savings serving as a buffer.

This is even as data from the Department of Statistics (SingStat) on Aug 22 showed personal saving contracted by 5.9 per cent in the second quarter of 2024 from the same period a year ago.

This is a sharp reversal from the 2 per cent growth recorded in the first quarter of the year.

But some respite is in sight as inflation continues to moderate and fall back to more comfortable levels.

SingStat defines personal saving as the difference between personal disposable income and private consumption expenditure goods and services.

It noted that its personal saving figure consists of funds available to repay debts, buy financial assets such as stocks and shares, and invest in non-financial assets like property.

For the second quarter, personal saving fell to $22.9 billion from $31.5 billion a year ago.

Mr Abel Lim, head of wealth management advisory and strategy at UOB, said this means there is less money left to pay off a mortgage or a car loan.

The reduction in personal saving, he added, is partly a reflection of the high cost of living here.

It is also a reflection of the slower growth in personal disposable income.

In nominal terms, SingStat said personal disposable income grew by 4 per cent in the second quarter from a year earlier to $79.6 billion.

This was a moderation from a 6.1 per cent increase in the first quarter.

The moderation, SingStat noted, can be attributed in part to weaker growth of pay for employees.

OCBC Bank's chief economist Selena Ling said there is historically a seasonal step-down in personal disposable income in the second quarter from elevated levels in the previous two quarters due to the year-end bonus and payouts for Chinese New Year.