Singaporeans expect inflation to rise to 3.35% in a year's time: survey

SINGAPOREANS' expectations of inflation have climbed over the past three months despite lower oil prices and a slowdown in China, a quarterly survey has found.

They now expect headline inflation to rise to 3.35 per cent in a year's time, according to a June poll for the Singapore Index of Inflation Expectations (SInDEx) conducted by the Singapore Management University (SMU).

This was higher than a record low of 3.05 per cent for the "one-year-ahead" headline inflation expectation recorded in March this year, SMU said in a press release on Monday.

The survey respondents also thought that core inflation in June 2016 would be 3.5 per cent, up from their "one-year-ahead" expectations of 3.44 per cent in March 2015.

SMU said that higher wage cost due to a tightening domestic labour market and other pass-through costs like transportation, together with a smaller-than-expected drop in fuel prices, could have outweighed declining accommodation costs, subsidies for foreign domestic worker levies and lower education costs through the waiver of some examination fees.

Other factors such as a persistent crude oil slump, a slowdown in China's growth and expected interest rate hikes in the United States would point towards lower inflation as well, it added.

The survey was conducted online and polled around 500 randomly selected individuals representing a cross-section of Singapore households, SMU said.