Singapore households expect inflation to fall next year

Inflation expectations over the next one year was in fact at its lowest at 4.2%.

Singapore households expect inflation to fall in the next one to five years. The third survey on inflation expectations Index released by MasterCard and Singapore Management University shows that Singapore’s inflation expectations dropped in the first quarter of 2012. This may be attributed to more informed consumers and improved optimism towards the global economy.

The third SInDEx survey follows two earlier surveys conducted in September and December last year. The third online survey was conducted in March 2012 and it gathered feedback from around 400 individuals from Singapore households. Consumers were asked a variety of demographic and socioeconomic questions. The consumers also shared their views on perceived values of economic variables over the next one to five years.

The March 2012 quarterly survey showed for the current year, the SInDEx1, a composite medium term inflation expectations index which measures inflation expectations over the next one year, was at its lowest at 4.2% since its inception. The Headline inflation expectations (which measures overall inflation expectations for the coming one year) was at 4.13 %, a drop from the 4.7% recorded last December. The March figure is also the lowest since the index was first created in September 2011. The medium term Singapore Core inflation expectations (excluding accommodation and private transportation) also reached a new low of 4.2 % in March.

As for the next five years, SKBI-MasterCard Singapore Index of Inflation Expectations (SInDEx5, the composite weighted five-year inflation expectations) also fell from 5.16% to 4.97%. The five-year Headline inflation expectations (which measures overall inflation expectations five years from now) dropped slightly from 5.3% in December to 5.2%. The five-year Singapore Core inflation expectations (excluding accommodation and private
transportation) also dropped from 5.09% to 4.8%.