Singaporeans' inflation expectations fall to 2.93% in September: SMU poll

SINGAPOREANS' one-year-ahead median headline inflation expectations fell slightly to 2.93 per cent from June's 3.23 per cent, attributed to factors like declining private road transport inflation due to lower COE premiums, and a loosening labour market.

According to Singapore Management University's (SMU) quarterly Singapore Index of Inflation Expectations (SInDEx) survey, the current one-year-ahead median headline inflation is still lower, compared to the historical mean headline inflation average of 3.46 per cent (since September 2011), but higher than the recent third quarter average of 2.78 per cent.

Singaporeans were polled on their views on expectations of inflation-related and asset management related variables over the medium term (one-year-ahead) to long term (five-year-ahead).

The mean one-year-ahead headline inflation rate, also moved down to 3.21 per cent in the September 2017 survey, compared to June's 3.56 per cent, the survey said.

The survey also showed the five-year-ahead median headline (CPI-All Items) inflation expectations in September 2017 also moderated to 3.6 per cent from 4.01 per cent in June 2017.

Overall, the composite five-year-ahead median Singapore Index of Inflation Expectations (median SInDEx5) eased in September 2017 to 3.43 per cent from 3.89 per cent in June 2017, lower than its historical median of 4.11 per cent.

The survey noted the relative strength of the Singapore dollar against major currencies, such as the US dollar and the British pound, might have slowed imported inflation, and hence, future expected energy prices.

The survey highlighted main challenges come from weaker productivity growth and persistently low inflation despite accommodative monetary policies, coupled with significant policy uncertainty such as increasing protectionism in many countries including G-3 economies - US, eurozone and Japan.