dotlah! dotlah!
  • Cities
  • Technology
  • Business
  • Politics
  • Society
  • Science
  • About
Social Links
  • zedreviews.com
  • citi.io
  • aster.cloud
  • liwaiwai.com
  • guzz.co.uk
  • atinatin.com
0 Likes
0 Followers
0 Subscribers
dotlah!
  • Cities
  • Technology
  • Business
  • Politics
  • Society
  • Science
  • About
  • Lah!

Inflation Expectations Decline Modestly

  • July 21, 2020
Total
0
Shares
0
0
0

These are the research findings of the 36th round of quarterly release for the DBS-SKBI Singapore Index of Inflation Expectations (SInDEx) Survey at the Sim Kee Boon Institute for Financial Economics (SKBI), Singapore Management University (SMU).

One-year-Ahead headline inflation expectations edged down to 3.0% in June 2020, from 3.1% in March 2020, slightly down compared to the second quarter average of 3.3% since the survey’s inception in 2012 till-2019.

The overall CPIEx Inflation Expectations, after adjusting for potential behavioral biases and re-combining across components, remained unchanged at 2.9% in June 2020 compared to March 2020.

In the June 2020 wave, we did an in-depth survey on potential impact of Covid-19 on inflation expectations of different components of CPI. Overall, food and healthcare cost inflation expectations have moderately significant positive impact possibly due to the expected disruption from the pandemic, while other components are not impacted. Analyzing the impact of Covid-19 on overall inflation expectations, there is a divergence of views — about half the respondents expect a positive impact while the other half expects a negative impact.

Excluding accommodation and private road transportation related costs, the One-year-Ahead Core CPIEx inflation expectations edged up slightly to 3.2% in June 2020 (3.1% in March). This can perhaps be attributed to the increased level of uncertainty particularly related to a cognitive dissonance in terms of the impact of the Covid-19 crisis on the dislocation of supply chains once the economy reopens.

As a robustness check on core inflation expectations, for a subgroup of the population who own their accommodation and use public transport, the One-year-Ahead CPIEx core inflation expectations pared to 2.8% in June 2020 from 2.9% in March 2020. Not being exposed to private road transportation or accommodation expenses; this subgroup’s expectations of core inflation closely resemble the Singapore Core Inflation Expectations. The divergence in views in the subgroup, compared to the overall Core CPIEx inflation expectations, is probably due to the heightened level of uncertainty prevalent in the economy with an overall modest downward trend in inflation expectations.

The One-year-Ahead composite index SInDEx1, that puts less weight on more volatile components like accommodation, private transport, food and energy, polled at 3.1% in June 2020, down from 3% in the March 2020 SInDEx survey, and below the second quarter average of 3.4% since the survey’s inception in 2012 till 2019.

In June 2020, around 79% of the survey respondents believe Covid-19’s impact on inflation would be significant, and 78.6% believe that it will have a significant impact on  the economy.

In addition, around 13.1% of Singaporeans polled expect there will be a more than 10% reduction in salary in the next 12 months, while the median salary increment expectation is between -1% and 1%. In addition, the salary increment and their belief in the length or duration of Covid-19’s impact seems unrelated.

SMU Assistant Professor of Finance and founding Principal Investigator of the DBS-SKBI SInDEx Project, Aurobindo Ghosh observed, “With global infection rate at more than 13 million and more than 0.5 million deaths, and reopening plans being rolled back in different developed and large emerging markets, it’s hardly surprising that Singaporeans are treading cautiously about future prospects of price changes. This can explain the divergence in views on the impact of Covid-19 on the Singapore Core inflation expectations with temporary price increase expected in components like food and healthcare, the former possibly being impacted by supply chain dislocations and the latter due to longer term impact of Covid-19. Over half of respondents expect Covid-19 to contribute positively to inflation in healthcare and food, while more respondents expect Covid-19 to dampen inflation in other CPI components. According to some ongoing global studies by Alberto Cavalho (2020) and the UK Office of National Statistics (ONS), perceived inflation rate might deviate from the official headline inflation owing partly to significant changes in consumption patterns induced by the pandemic. In general, consistent with other academic studies on survey based instruments, Singaporeans’ inflation expectations seem to be capturing the direction of movement better than the level of inflation.“

DBS Chief Economist and Managing Director of Group Research, Dr. Taimur Baig commented, “Singaporeans are facing difficult and uncertain economic circumstances, which would likely weigh on their expectation of employment and wages in the near term. However, sentiments may have stabilized to some extent lately owing to multiple support packages from the government. The findings of the latest round of the DBS-SKBI survey are consistent with the narrative of well anchored expectations undergoing a downward drift.”

SMU Professor and SKBI Director Dave Fernandez noted that “The negative shock of COVID-19 to Singaporeans was abundantly evident in this survey, with some expecting double-digit salary reductions and nearly 80% seeing the hit to the economy and inflation as ‘significant’ and ‘longer term.’ Hopefully, the easing of restrictions presages a potential bottoming of this downshift in expectations, as has started to become evident in household surveys outside of Singapore, such as in Australia.”

According to SKBI Principal Researcher Thomas Lam, “An ongoing challenge amid the pandemic is determining the perceived tradeoffs between safeguarding the population and protecting livelihoods given incomplete information. The details from the latest survey suggest that roughly four out of seven view safeguarding the population, especially vulnerable groups, as viable only in the short- to medium-term (not beyond one year).  But the proportion in favor of preserving jobs and the economy is actually more than twice as large as those who value unconditional public health measures.”

For the longer horizon, the Five-year-Ahead CPIEx inflation expectations in the June 2020 survey declined to 3.6% compared to 4.1% in March 2020. The current polled number is significantly lower than the second quarter average of 4.1% since the survey’s inception in 2012 till 2019).

The Five-year-Ahead CPIEx core inflation expectations (excluding accommodation and private road transportation related costs) remained unchanged at 3.7% in June 2020 compared to March 2020. Overall, the composite Five-year-Ahead SInDEx5 dropped to 3.6% in June 2020 from 3.9% in March 2020. In comparison, the second quarter average value of the composite Five-year-Ahead SInDEx5 was 4.1% since the survey’s inception in 2012 till 2019.

“Longer term impact on inflation expectations is less predictable; however, there seem to be a trend of a larger downward impact of inflation expectations in the long term given that economies around the world are going into a Covid-19 induced downturn. We polled Singaporeans on their views of the scenarios at which they think economies should reopen with due mitigation measures like wearing face masks, social distancing and personal hygiene. We found that around 80% of respondents believe that policymakers should prioritize life over livelihood in the short run, particularly of the vulnerable population, even at the cost of short-term economic pain before reopening the economy. This is higher than the Edelman Trust Barometer Spring update in April 2020, where about 67% of respondents globally prioritized saving lives at the cost of economic damage,” Professor Ghosh observed.

 

Total
0
Shares
Share
Tweet
Share
Share
Related Topics
  • COVID-19
  • DBS
  • DBS-SKBI Singapore Index of Inflation Expectations
  • Inflation
  • Sim Kee Boon Institute for Financial Economics
  • SInDEx
  • Singapore Management University
  • SKBI
  • SMU
dotlah.com

Previous Article
  • Lah!

SUTD Collaborates With Shenzhen Technology University On Joint Immersion Programme

  • July 21, 2020
View Post
Next Article
  • Cities

LTA Awards Four Jurong Region Line Contracts

  • July 21, 2020
View Post
You May Also Like
View Post
  • Lah!

Tariffs, Trump, and Other Things That Start With T – They’re Not The Problem, It’s How We Use Them

  • John Francis
  • March 25, 2025
View Post
  • Lah!

Canonical announces 12 year Kubernetes LTS

  • John Francis
  • March 4, 2025
dotlah-smartnation-singapore-lawrence-wong
View Post
  • Artificial Intelligence
  • Featured
  • Features
  • Lah!
  • Machine Learning
  • Technology

Growth, community and trust the ‘building blocks’ as Singapore refreshes Smart Nation strategies: PM Wong

  • Dean Marc
  • October 9, 2024
dotlah-singapore-ndp-2024
View Post
  • Lah!

Here’s what to expect for NDP 2024!

  • dotlah.com
  • August 9, 2024
dotlah-singapore-airlines_may_21-1716298816
View Post
  • Lah!

Severe turbulence during Singapore Airlines flight leaves several people badly injured. One man died

  • majulah
  • May 22, 2024
dotlah-pm-lee-lawrence-wong-9656d4cd-1fa4-40ed-905d-e19e639b8476_728802dd
View Post
  • Lah!
  • People
  • Politics

End of Lee Era for Singapore as PM Steps Down

  • dotlah.com
  • May 16, 2024
DPM Lawrence Wong will be Singapore's fourth prime minister on May 15. ST PHOTO: LIM YAOHUI
View Post
  • Lah!
  • People
  • Politics

7 things to know about Singapore’s next prime minister Lawrence Wong

  • dotlah.com
  • May 15, 2024
When asked about his leadership style, DPM Lawrence Wong said he will be open and consultative, but he will not shirk from doing what is necessary for Singapore's future. ST PHOTO: LIM YAOHUI
View Post
  • Features
  • Lah!
  • People
  • Politics

‘We are prepared to relook everything’: Lawrence Wong on a changing society and his hopes for S’pore

  • dotlah.com
  • May 15, 2024


Trending
  • 1
    • Science
    • Society
    When Will There Be A Coronavirus Vaccine? 5 Questions Answered
    • January 29, 2020
  • 2
    • Lah!
    Sustainability Research At NUS Gets A Boost From Temasek
    • October 4, 2021
  • 3
    • Cities
    • Lah!
    Sembcorp Industries, PT PLN Batam And Suryagen To Jointly Develop Large-Scale Integrated Solar And Energy Storage Project In Indonesia
    • October 27, 2021
  • 4
    • Lah!
    The Secret To Defeating Thanos All Along
    • April 26, 2019
  • 5
    • People
    • World Events
    How The Trans-Atlantic Slave Trade Uprooted Millions
    • June 29, 2020
  • 6
    • Society
    How Can We Actually Create Happy Societies?
    • December 17, 2019
  • 7
    • Lah!
    ​Cambridge University And NTU Singapore Establish New Research Centre To Support Lifelong Learning
    • October 8, 2020
  • 8
    • Lah!
    SGX iEdge Licenses Its Bitcoin Index To Propine
    • November 3, 2021
  • 9
    • Lah!
    Singtel Accelerates Shift To Renewable Energy With Solar Energy Installation At Bedok Data Centre
    • April 24, 2020
  • 10
    • Lah!
    • Society
    DBS Rolls Out Digital Solutions To Give Businesses “Contact-free” Banking Options For Greater Peace Of Mind During Covid-19
    • February 29, 2020
  • 11
    • Lah!
    Why Is Singapore So Rich?
    • June 4, 2019
  • 12
    • Lah!
    ACRA And SGX RegCo Emphasise Importance Of High-quality Financial Statements Amid COVID-19
    • July 29, 2020
Trending
  • 1
    The Summer Adventures : Hiking and Nature Walks Essentials
    • June 3, 2025
  • 2
    Trump’s global trade plans are in disarray, after a US court ruling on ‘Liberation Day’ tariffs
    • May 29, 2025
  • 3
    315,000 Singaporeans have used new career and skills planning tool by SkillsFuture Singapore
    • May 23, 2025
  • college-of-cardinals-2025 4
    The Definitive Who’s Who of the 2025 Papal Conclave
    • May 8, 2025
  • conclave-poster-black-smoke 5
    The World Is Revalidating Itself
    • May 7, 2025
  • oracle-ibm 6
    IBM and Oracle Expand Partnership to Advance Agentic AI and Hybrid Cloud
    • May 6, 2025
  • 7
    Conclave: How A New Pope Is Chosen
    • April 25, 2025
  • 8
    Canonical Releases Ubuntu 25.04 Plucky Puffin
    • April 17, 2025
  • 9
    Mathematicians uncover the logic behind how people walk in crowds
    • April 3, 2025
  • 10
    Tokyo Electron and IBM Renew Collaboration for Advanced Semiconductor Technology
    • April 2, 2025
Social Links
dotlah! dotlah!
  • Cities
  • Technology
  • Business
  • Politics
  • Society
  • Science
  • About
Connecting Dots Across Asia's Tech and Urban Landscape

Input your search keywords and press Enter.