Singapore households’ inflation expectations for the year ahead continue to decline

The latest findings to SMU’s Singapore Index of Inflation Expectations (SInDEx), which carried out an online survey of 500 individuals selected from a cross section of Singapore households in March, revealed that consumers expect a headline inflation rate of 3.05 per cent for the year ahead, down from the previous survey's 3.52 per cent in December last year. This is the lowest rate recorded since the quarterly survey was first started by the SMU Sim Kee Boon Institute for Financial Economics in September 2011. SMU Assistant Professor of Finance (Education) Aurobindo Ghosh said that lower than expected pass-through costs despite a tight labour market, as well as medical subsidies, have brought down inflation expectations. Assistant Prof Ghosh stressed that the expectations from SInDEx usually provide lower fluctuations than short term inflation expectations, as the consumption basket for measuring Consumer Price Index is representative but not experienced by all individuals. As such, there may not be a marked decline in the expenditures of many consumers.