The Economics Of Rising Milk Powder Prices In Singapore
“As long as AVA approves its import, the milk is good enough. I had no reason to pay more and would buy whatever was cheapest or on sale. The kids didn’t always like adjusting but did so anyway. That’s what I found great about kids – they adjust given time and encouragement.”
The above is a recent statement by a Member of Parliament which has caught the attention of many. The statement was deemed insensitive in a few aspects, but the main underlying unhappiness lies in the price of milk powder.
In this article, we take a look at some of the factors which might have resulted in the crazy price soar for infant milk powder.
Average Cost Of Milk Powder Up By 120% In 10 Years
The cost of having a baby usually comes up as the main consideration for most couple planning to have a baby.
Over the past 10 years, the average price of a 900g tin of infant milk powder has increased from $25.42 to $56.06.
Hence, no matter the brand of milk formula, the cost of feeding a baby is 120% of that a decade ago.
What Contributed To The Crazy Price Soar?
Infant Milk Powder Is The Only Source Of Nutrients For Infants
A quick look at the price increase for infant milk powder compared with the rest of our staple food indicates the highest jump for infant milk powder.
Infants, unlike adults, depend solely on infant milk powder for their source of nutrients. Adults, on the other hand, are able to go for a cheaper form of food for their nutrients intake. This makes infant milk formula price inelastic in demand as compared to the rest of staple food.
With little regulations, producers of milk powder are able to price the milk powder to their advantage.
Producers of formula milk are well aware that parents tend to be loyal to the brand their infant is first exposed to in the hospital. With this, producers of formula milk may have sponsorship agreements with hospitals to carry their brand at a marketing cost. This is to ensure the awareness of the brand of their formula milk and to enforce loyalty in consumers once they witness the acceptance of their infant towards the brand of milk formula.
With this, producers of formula milk may have sponsorship agreements with hospitals to carry their brand at a marketing cost. This is to ensure the awareness of the brand of their formula milk and to enforce loyalty in consumers once they witness the acceptance of their infant towards the brand of milk formula.
Endless commercials portraying how milk formula can affect the growth of infants are constantly fed to consumers all over media. Despite weak scientific evidence to support the claims, all these marketing tactics come at a huge cost. This cost is ultimately passed down to consumers.
It comes as no surprise that having a baby in Singapore is not cheap, and consumers are usually at the mercy of producers when they are large enough to affect prices of a certain product. This is especially true for products that are price inelastic in demand.
Keeping that in mind, we see the need for parents in Singapore to start their financial planning early.
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