Singapore’s inflation outlook: Only 4 in 10 believe prices will fall

SINGAPORE: Recently, Singaporeans have shown a shift in their expectations regarding inflation.

According to the latest findings from the Singapore Index of Inflation Expectations Survey (SinDEx), conducted by DBS Bank and Singapore Management University and reported by the Singapore Business Review, fewer people anticipate an inflation decline over the next year.

Optimistic yet cautious

As of September 2024, only 44.8% of Singaporeans believe inflation will decrease, a slight drop from 45.2% in June.

Meanwhile, the number of those expecting inflation to rise has also edged down to 44.6% from 45.4%. This suggests cautious optimism and a recognition of the complexities involved.

Among those who think prices will fall, the most cited reason—37.4%—is the slowdown in global growth. This points to a broader concern about economic conditions affecting price levels.

Conversely, those who expect inflation to increase have identified several key factors — 29.7% attribute rising prices to higher interest rates set by central banks.

24.5% are worried about geopolitical tensions, particularly the ongoing conflicts involving Hamas and Israel, as well as Ukraine and Russia.

Additionally, 14.4% see increased demand following the easing of pandemic restrictions as a contributing factor, while supply chain disruptions (14%) and fiscal measures like the GST hike (11.8%) are also concerns.

Despite these mixed expectations, the overall forecast for inflation remains steady at 3.8% for the upcoming year.

Inflation eased, but volatility persists

In a statement published by the Singapore Management University news page, Dr Taimur Baig, Chief Economist at DBS Bank, notes that while inflation has significantly eased since its peak in 2022/2023, volatility persists.

He emphasizes that although expectations have dipped somewhat, the journey toward stabilization is ongoing.

The uncertainty surrounding supply and demand, liquidity, and global central bank policies continues to influence the outlook.

Nonetheless, the steady inflation expectations in Singapore reflect the credibility of the Monetary Authority of Singapore (MAS) in managing these economic challenges.

As Singaporeans navigate a landscape of fluctuating economic indicators and global events, their cautious outlook on inflation highlights the complexities of today’s financial environment.

Featured image by Depositphotos (for illustration purposes only)