Singaporeans' inflation forecast for 2016 slips to 3.23%

Blame it on oil prices trickling down unstoppably.

Singaporeans’ One-year-Ahead inflation expectations have slipped to 3.23%, according to the research findings of the latest quarterly survey for Singapore Index of Inflation Expectations (SInDEx) by Singapore Management University (SMU).

Prolonged slump in global oil prices owing partly to oversupply and sluggish demand, as well as continued weakness in commodity prices, have had deleterious effects on global growth prospects.

Exacerbating the global factors which is resulting in benign and almost negligible imported inflation, domestic factors such as continued decline in private transportation cost due to an impending supply boost in Certificates of Entitlement and additional supply of accommodation in the medium term might have also contributed in dragging the inflation expectations downwards.

Here's more from SMU's SInDEx:

The SInDEx, co-developed by Assistant Professor Aurobindo Ghosh of the Lee Kong Chian School of Business, is derived from an online survey of around 500 randomly selected individuals representing a cross section of Singapore households. The online survey helps researchers understand the behavior and sentiments of decision makers in Singapore households. The quarterly SInDEx survey has yielded two composite indices, SInDEx1 and SInDEx5.

In the latest and seventeenth wave of the SInDEx survey conducted in September 2015, consumers shared their views on expectations of inflation-related variables over the medium term (One-year-Ahead) to long term (Five-year-Ahead).

The results of the September 2015 survey showed that compared to June 2015, the One-year-Ahead headline inflation (or CPI-All Item inflation) has declined to 3.23% from 3.35% in June 2015. As a comparison benchmark, the median One-year-Ahead headline inflation rate, considered by many to be more representative and minimally affected by outliers, inched down to 2.92% in the September 2015 survey compared to 3.14% in the June 2015 survey.

Compared to the historical headline inflation expectations average of 3.94% and the more recent third quarter average of 3.48%, the current One-year-Ahead headline inflation is lower. The inflations expectations show that Singapore households are probably expecting weaker prospects of the global growth and domestic price pressures, and consequently expect overall inflation will be subdued.

Tracking the overall headline inflation, the One-year-Ahead Singapore core inflation expectations (excluding accommodation and private transportation related costs) also moderated down to 3.31% in September 2015 (from 3.5% in June 2015), its lowest level recorded since SInDEx survey started in 2011. However, significantly, for a subgroup of the population who own their accommodation and use public transport, the One-year-Ahead Singapore core inflation rate moderated down to 3.12% in the September 2015 survey compared to 3.38% in June 2015, its lowest level since June 2013. These respondents are possibly more informed about the Singapore core inflation rate as they changes on accommodation or private transportation costs directly.