Chart of the Day: Consumers spooked by rising prices even as deflation intensifies

Singaporeans expect headline inflation to reach 3.35%.

Singaporeans are still wary of rising prices despite several consecutive months of negative inflation, according to the latest quarterly survey for Singapore Index of Inflation Expectations (SInDEx) by Singapore Management University (SMU).

The survey showed that compared to March 2015, the One-year Ahead headline inflation has advanced to 3.35% from a record low of 3.05% in March 2015.

As a comparison benchmark, the median One-year-Ahead headline inflation rate, considered by many to be more representative and minimally affected by outliers, inched up from 2.87% in March 2015 survey to 3.14% in the latest June 2015 survey.

The higher inflation expectations were driven by downward adjustment of global growth forecasts by IMF, volatility in the Chinese capital market, Greek debt crisis and domestic structural reforms.

These concerns overshadowed benign imported inflation and lower accommodation costs, the survey said.

"We noted there is an increase in inflation expectations across the board possibly due to domestic price pressures and structural changes like tightening labour market, overshadowing the subdued oil prices and otherwise benign imported inflation conditions," said Aurobindo Ghosh, Assistant Professor of Finance from the Lee Kong Chian School of Business.