Singaporeans increasingly concerned over inflation: SMU survey

SINGAPORE — More Singaporean households are expecting inflation rates to rise significantly over the next year, according to survey results published by the Singapore Management University (SMU) today (Oct 20).

SMU’s Singapore Index of Inflation Expectations (SInDEx) study is a a quarterly survey that examines Singaporeans’ wariness to future price increases. For the first time in two years, the one-year-ahead inflation expectations of Singapore households saw an increase, rising to 3.73 per cent in September.

Assistant Professor Aurobindo Ghosh, co-creator of the SInDEx project, said that the rise in expectation could be placed down to fears over domestic pass-through price pressures, such as rental and tight labour conditions.

“Recent moderation in accommodation prices and private car prices in Singapore, together with subdued global and regional economic conditions, seem to have brought down the current CPI-All inflation rates to very low levels.

“However, the Monetary Authority of Singapore recently projected that there might be an upward pressure on the Singapore core inflation, possibly from the tight labour market and other pass-through costs. The elevated inflation expectations, including the headline inflation rate, is likely due to behavioural biases in survey based data which might cause respondents to over emphasise price rise in everyday items, while ignoring big ticket items,” Prof Ghosh said.

The SInDEx study asked Singaporeans about how they viewed potential inflation in five years’ time. The Five-year-Ahead overall (CPI-All Items) inflation expectations stood flat at 4.72 per cent in September, unchanged since December 2013.