Singaporean consumers' inflation expectation stays at its lowest level since 2011

One-year-Ahead median inflation expectations unchanged at 2.63%.

Singaporeans' inflation expectations remained at its 5-year record low of 2.63%, according to the research findings of the latest quarterly survey for Singapore Index of Inflation Expectations (SInDEx) by Sim Kee Boon Institute for Financial Economics (SKBI) at Singapore Management University (SMU).

In a survey conducted in September 2016, consumers shared their views on expectations of inflation-related variables over the medium term (One-year-Ahead) to long term (Five-year-Ahead).

As a comparison benchmark, the mean One-year-Ahead headline inflation rate, moderated down to its new low of 2.82% in the September 2016 survey compared to 2.86% in the June 2016 survey, continuing its sub 3% value since December 2015.

Compared to the historical median headline inflation expectations (since September 2011) average of 3.54% and the more recent third quarter average of 2.78%, the current
One-year-Ahead median headline inflation is significantly lower.

 Despite weak global growth prospects and headwinds from political uncertainty in the US and Eurozone, representative Singaporean households surveyed believe that One-year-ahead expected price changes seem to be plateauing.

However, unlike the overall headline inflation, the One-year-Ahead median Singapore core inflation expectations (excluding accommodation and private road transportation related costs) in September 2016 saw the biggest drop to 2.47% (from 3.00% in June 2016), its lowest ever recorded average since the survey’s inception in September 2011.

More significantly, for a subgroup of the population who own their accommodation and use public transport, the One-year-Ahead median Singapore core inflation rate for the subgroup also dropped to its historic low of 2.3% in September 2016 compared to 2.9% in June 2016.

This subgroup’s expectations of inflation closely tracks the Singapore Core Inflation Expectations, as they are not exposed to private transport or private accommodation expenses.