World Economy

Singapore Inflation at All-Time Low

Singapore Inflation at All-Time LowSingapore Inflation at All-Time Low

Singapore’s inflation expectations have fallen due to global and domestic factors, according to the results of a Singapore Management University survey released on Monday.

The Singapore Index of Inflation Expectations (SInDEx), which examines the behavior and sentiments of decision makers in Singapore households, revealed that expectations for headline inflation for one year ahead fell to an all-time low of 3.05 percent since its launch in September 2011, said SMU in a news release, Channel NewsAsia reported.

“Low oil prices and fluctuating exchange rates are probably here to stay in the medium term. These phenomena have had a significant negative impact on expectations of inflation the world over, including the G3 economies,” explained Assistant Professor of Finance Aurobindo Ghosh from the Lee Kong Chian School of Business.

“Domestic factors such as the impending supply glut in COE quota and upcoming additional supply of accommodation, lower than expected pass-through costs despite tight labor market and medical subsidies have brought down the inflation expectations by Singaporeans,” he added.

Consumers lowered their expectations for inflation over the medium term and long term, the survey among 500 individuals revealed.

The SInDEx1, a composite index of inflation expectations for one year ahead, maintained an overall downward trend to 3.26 percent, significantly lower than the historical average of 4.08 percent.

The one-year-ahead core inflation expectations also fell to 3.44 percent in March, from 3.6 percent in December.

Similarly, the SInDEx5, a composite of inflation expectations for five years ahead, came in at 4.05 percent in March, down from 4.26 percent in December 2014.

The five-year-ahead overall inflation expectations fell to 4.16 per cent in March, down from 4.48 percent in December. The core inflation rate expectations for the five years ahead also fell to 3.94 percent, down from 4.12 percent.