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Singapore Inflation Expectations Drop as Slowdown Continues in the BRICS Economies


MasterCard and SMU Research Shows Inflation Expectations Falling Below 4% Amid Bleak Global Cues

Singapore – Singapore consumers are expecting inflation to continue on a downward trend in the next one to five years amid slowdown in big emerging economies like China and Brazil (in general the so called BRICS economies) and persistent weakness in the Eurozone, according to the latest findings of the SKBI-MasterCard Singapore Index of Inflation Expectations (SInDEx).

The SInDEx, which was jointly developed by Singapore Management University’s Sim Kee Boon Institute for Financial Economics (SKBI) and MasterCard, is derived from an online survey of around 400 randomly selected individuals from Singapore households.

The online survey helps researchers understand the behaviour and sentiments of decision makers in Singapore households. This is the eighth wave of the quarterly survey conducted under the collaboration since the indices were officially launched in January 2012. SInDEx was developed by Dr. Aurobindo Ghosh and Professor Jun Yu from SMU SKBI, in collaboration with MasterCard.

In the latest survey conducted in June 2013, consumers shared their views on perceived values of economic variables over the next one to five years.

Comparing the two waves of research conducted in March 2013 and June 2013, consumers expect inflation to continue to decline in the next 12 months. Their perception of the One-year-Ahead headline inflation (CPI-All Items) eased to 3.91% in June 2013, down from 4.12% in March 2013. This is the lowest it has been since the index was first created in September 2011, and the first time the One-year-Ahead headline inflation (CPI-All Items) has fallen below 4%.

Similarly, the forward looking SInDEx1, a composite weighted index of One-year-Ahead inflation expectations decreased to 3.99% (from 4.26% in March), also its first sub 4% value since the survey’s inception. The One-year-Ahead Singapore core inflation expectations (excluding accommodation and private transportation) also reached to a new low of 4.05% in June (from 4.32% in March).

Dr. Aurobindo Ghosh, co-creator of SInDEx, and Programme Director of SMU SKBI said, “Better than expected job situation and housing market in the U.S. seem to portend an earlier tapering of the U.S. Federal Reserve’s stimulus spending with accommodative monetary policy, and consequent upward pressure on interest rates. Furthermore, Singapore is facing a weakening impact of imported inflation owing to a cyclical slowdown of some of the ASEAN economies, as well as regional economies like China and India.”

“Macro-prudential policies like cooling measures for the property market and curbs on financing on private transportation, and gradual emphasis on individual deleveraging, seem to have an impact on the public’s perception of overall inflation expectations,” Dr. Ghosh added.

The long term Five-year-Ahead overall (CPI-All Items) inflation expectations is at 4.99%, lower than the 5.2% recorded in the March 2013 survey, maintaining the trend of decline across the board. The Five-year-Ahead Singapore core inflation rate (excluding accommodation and private transportation) decreased to 4.45% from 4.82% in the March wave, following a consistent downward trend since September 2012.

The composite Five-year-Ahead Singapore Index of Inflation Expectations (SInDEx5) in June 2013 fell to 4.68% from 4.96% in the survey conducted in March 2013, also the lowest since inception after a drop of nearly 0.3%.

Dr. Yuwa Hedrick-Wong, global economic advisor, MasterCard said, “There are domestic cost pressures evident in this survey related to a tightening labour market and Singapore’s smaller than expected growth figures and forecast cuts in manufacturing and trade. Of bigger concern in Asia, however, is China’s slowdown which is causing slower growth and weakening economies across the region.”


Two indices were created, SInDEx1 and SInDEx5, to measure the 1-year inflation expectations and the 5-year inflation expectations. The data for the SKBI-MasterCard Survey was collected online

from about 400 consumers. The sampling was done using a quota sample over gender, age and residency status to ensure representativeness of the sample. Employees in some sectors like journalism, marketing were excluded as that might have an effect on their responses to questions on consumption behaviour and expectations

About Singapore Management University

A premier university in Asia, the Singapore Management University (SMU) is internationally recognised for its world class research and distinguished teaching. Established in 2000, SMU’s mission is to generate leading edge research with global impact and produce broad-based, creative and entrepreneurial leaders for the knowledge-based economy. It is known to be a pioneer in Singapore for its interactive and technologically-enabled pedagogy of seminar-style teaching in small class sizes which remains its unique hallmark.

Home to about 8,000 students, SMU comprises six schools: School of Accountancy, Lee Kong Chian School of Business, School of Economics, School of Information Systems, School of Law and School of Social Sciences, offering a wide range of bachelor’s, master’s and PhD degree programmes in business and other disciplines.

With an emphasis on generating rigorous, high impact cross-disciplinary research that addresses Asian issues of global relevance, SMU faculty collaborates with leading foreign researchers as well as partners in the business community and public sector through its research institutes and centres. Through executive education, the university provides public and customised training for working professionals in meeting the needs of the economy. Close relationships with leading universities, including The Wharton School, Carnegie Mellon, the University of Pennsylvania and the University of Chicago’s Booth School of Business, allow SMU to draw on their academic and research strengths in various collaborations. The SMU city campus is a state-of-the art facility located in the heart of downtown Singapore, fostering strategic linkages with the business and wider community.

About Sim Kee Boon Institute for Financial Economics

Established in July 2008, the Sim Kee Boon Institute for Financial Economics (SKBI) at the Singapore Management University promotes the study of Financial Economics and Financial Econometrics in areas of strategic relevance to Singapore’s economy and the economies of the region. A significant addition to Singapore’s efforts to be a financial hub in Asia, SKBI is a leading institute for academic research with strong industry application and practical dimension in the area of Financial Economics.

The Institute has four major research centres for quantitative financial analysis and offers training programmes for professionals in the financial industry. Its work is conducted in close collaboration with leading scholars in financial economics and financial econometrics from around the world as well as leading international organisations and experts from industry.

About MasterCard

MasterCard (NYSE: MA),, is a technology company in the global payments industry. We operate the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and

territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter @MasterCardNews, join the discussion on the Cashless Conversations Blog and subscribe for the latest news.


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