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These are the research findings of the 42nd 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).

• These are the research findings of the 42nd 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 moderately elevated to 3.2% in December 2021, compared to 3.1% in September 2021. Headline inflation expectations continued its upward trend since September 2020. However, the current headline inflation expectations is on par with the 10 year (2011-2020) fourth quarter average of 3.2%.
• As a comparison benchmark, the MAS Survey of Professional Forecasters (MAS SPF) data released in December 2021 showed that the median forecasts of CPI All-Items inflation for 2022 was 2.1%, up from 1.4% in the September 2021 survey. The latest release from Department of Statistics showed that average CPI-All Items in January–November in 2021 was 2.2%, higher compared to the reading in the same period in 2020, while the latest November 2021 monthly inflation is 3.8%, year on year. In view of accumulating external and domestic cost pressures, the Monetary Authority of Singapore tightened its monetary policy stance slightly in October 2021 to “ensure price stability over the medium term”.
• The overall CPIEx Inflation Expectations, after adjusting for potential component-wise behavioral biases and re-combining across components, decreased to 3.1% in December 2021 from 3.7% in September 2021. Inflation expectations for most components witnessed moderate declines while others were unchanged. Components that saw a decrease in inflation expectations from the September 2021 survey include transportation, housing & utilities, healthcare, recreation & culture, communications, and miscellaneous goods & services.
• We also observed that the free response behaviorally adjusted overall inflation expectations remained steady at 3.0% in December 2021, unchanged from the previous quarter.
• In the December 2021 wave, continuing the analysis we embarked on in September 2020, an in-depth survey on the potential impact of Covid-19 on inflation expectations of different components of CPI was conducted. We found that the inflation expectations for most components are expected to have no Covid-19 related impact, including the overall One-year- Ahead inflation. Two components are exceptions to this - overall Five-year-Ahead inflation and healthcare – both of which are expected to see limited positive impact.
• Following the academic work by Alberto Cavallo of Harvard Business School (2020) and the UK Office of National Statistics (ONS), respondents were asked if there were any substantive changes to their consumption basket. In December 2021, results suggest there is no change in any of the components. This perhaps indicates that after two years since the pandemic was first declared, Singaporeans are getting used to the new normal and their component-wise monthly expenditures now remain stable even in the face of new waves of infections and new restrictions.
• Excluding accommodation and private road transportation related costs, the One-year-Ahead CPIEx core inflation expectations saw a slight uptick with an increase from 3.0% in September 2021 to 3.1% in December 2021, similar to the increase in the headline inflation expectations.
• For a subgroup of the population who owns their accommodation and uses public transport, the One-year-Ahead CPIEx core inflation expectations pared from 3.0% in September 2021 to 2.9% in December 2021. This sub-sample measurement is potentially more accurate than the full sample measurement, as the respondents face the impact of core inflation on a day-to-day basis. Although this shift is the inverse of that observed in the full sample, the level is in line with the overall inflation expectations which has been largely flat, despite much stronger growth in housing prices leading to further property cooling measures from policymakers.    
• The One-year-Ahead composite index SInDEx1 that puts less weight on more volatile components like accommodation, private transport, food and energy related expenses polled at 3.2% in December 2021, an increase from the 3.0% figure polled in September 2021. It is on par with 3.2% since the survey’s inception in 2011 till 2020.
• In December 2021, around 59% of the survey respondents reported their belief that Covid-19’s impact on inflation would be significant compared to a higher proportion of 64% in September 2021. The share of survey respondents who feel that Covid-19 will have long-term impact on inflation similarly declined to around 59%, from about 68% in September 2021. Both results indicate that despite the pessimistic turn of events with the emergence of the Omicron variant and the renewed restrictions on travel, new waves of infections and continued constraints on normal life are being accepted as “the new normal” of an endemic Covid-19.
• In addition, around 10.4% of the Singaporeans polled expect a more than 5% reduction in salary in the next 12 months. This is slightly lower compared to 13.6% in September 2021. The median salary increment expectation stayed between -1% and 1%.
• As a measure of the tradeoff between prioritising economic growth compared to the cost to life, the so-called livelihood over life debate, the ratio was 2.6 in December 2021, higher than 2.2 in September 2021. This means for every person who prioritised life over livelihood, there are more than two who prioritised livelihood over life. The higher ratio indicates a shift in public’s attitude towards the pandemic. More Singaporeans are leaning towards further reopening of economy to support economic growth and job creation.

DBS Chief Economist and Managing Director of Group Research, Dr. Taimur Baig commented, “In line with global trend, especially among developed markets, Singapore has seen a steady rise in goods, energy, and services prices over the past year. Inflation expectations polled and estimated by the DBS-SKBI survey show similar trend, along with the insight that expectations are still anchored, with no sign of a sharp jump. Authorities have already begun adjusting their monetary and fiscal policy stance to address the bottoming of economic activities and rise in inflation, which ought to keep a lid on inflation expectations.”

SMU Assistant Professor of Finance and founding Principal Investigator of the DBS-SKBI SInDEx Project, Aurobindo Ghosh highlighted, “Global economy is at a crossroad. The rate of transmission of the Omicron variant, detected first in South Africa in November 2021, disrupted the gradual resumption of global travel and trade. Domestically, despite a vaccination rate of over 90% among eligible residents, broader re-opening up of the Singapore economy, including further relaxation of the safe management restrictions, had to be delayed in an abundance of caution against this highly transmissible strain. Having said that, the DBS-SKBI SInDEx survey suggests that Singaporeans seem to have priced in the new normal in forming their inflation expectations and behaviour, including having consumption baskets returning to their pre-pandemic levels (Cavallo, 2020).”

“From somewhat divergent beliefs in the September 2021 survey, we observe a broad-based decline in component-wise inflation expectations leading to a convergence of One-year-Ahead headline and core inflation expectations closer to a long-term average of about 3%, even after accommodating for behavioral and anchoring biases identified in academic literature. This convergence is potentially an effect of proactive policymaking via an unexpected tightening of the monetary policy in October 2021 and property cooling measures in December 2021 to promote a stable and sustainable property market. The inflation expectations polled in December 2021 display some degree of anchoring of medium term inflation expectations,” Prof Ghosh observed.

For the longer horizon, the Five-year-Ahead CPIEx inflation expectations decreased moderately from 3.9% in the September 2021 survey to 3.8% in December 2021. The current polled number continues to remain slightly lower than the fourth quarter average of 4.0% since the survey’s inception in 2011 till 2020.

The Five-year-Ahead CPIEx core inflation expectations (excluding accommodation and private road transportation related costs), on the other hand, remained unchanged at 3.6% in December 2021. Overall, the composite Five-year-Ahead SInDEx5 also remained unchanged at 3.7% in December. In comparison, the fourth quarter average value (since the survey’s inception in 2011 till 2020) of the composite Five-year-Ahead SInDEx5 is 3.9%.

“Responding to communications from the US Federal Reserve Board to control inflationary pressures and consensus from economists of the potential of multiple increases in the US benchmark interest rate in 2022, the International Monetary Fund (IMF) have issued a warning to emerging economies of a faster than expected increase in global interest rate which can potentially affect financial markets and depreciate currencies. Appreciating US dollar might also impact longer term inflation expectations through imported inflation (such as oil and commodity prices), while impending rollout of increased GST and domestic pass-through costs like wages and rental might impact Singaporeans’ pocketbooks. In addition, there is some evidence of pandemic restriction fatigue despite the emergence of the highly transmissible but potentially less virulent Omicron variant, as reflected in the life and livelihood debate. In December 2021, three respondents who prioritise livelihood over life for every respondent who chose life over livelihood, up from two in the September 2021 survey,” Professor Ghosh commented.

These are the research findings of the 43rd 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 CPIEx headline inflation expectations elevated to 4.1% in March 2022, compared to 3.2% in December 2021. Headline inflation expectation continued its upward trend since September 2020. The current polled CPIEx headline inflation expectations is significantly higher than the historical (2012-2021) first quarter average of 3.3%, and is the highest it has been since December 2012 when it last recorded above 4%.
• As a comparison benchmark, the MAS Survey of Professional Forecasters (MAS SPF) data released in March 2022 showed that the median forecasts of CPI All-Items inflation for 2023 was 2.4%. In the latest release from Department of Statistics, CPI-All Items inflation rose to 4.3% year on year in February, from 2.3% in 2021, following a mild deflation in 2020. In recognition of the fresh shocks to global commodity prices and supply chains which are adding to domestic cost pressures, the Monetary Authority of Singapore in their latest April 2022 policy review decided to further tighten the monetary policy, which builds on the policy moves in October 2021 and January 2022, to slow the inflation momentum and help ensure medium-term price stability.
• The overall headline Inflation Expectations, after adjusting for potential component-wise behavioral biases and re-combining across components, increased to 5.7% in March 2022 from 3.1% in December 2021. This is the highest value of this behavioral bias adjusted inflation expectations since we started recording it in Quarter 1 2019. Inflation expectations rose across all components with inflation expectation for transport costs registering the highest jump to 9.0% from 4.0% in the December 2021 survey.
• We also observed that the free response behaviorally adjusted overall inflation expectations increased to 5.0% in March 2022 survey, a substantial jump from 3.0% polled in December 2021. Multiple global factors and ground realities faced by consumers seem to be the main driver of such expectation formation.
• In the March 2022 wave, continuing the analysis we embarked on in September 2020, an in-depth survey on the potential impact of Covid-19 on inflation expectations of different components of CPI was conducted. We found that the inflation expectations for most components are expected to have no disproportionate Covid-19 related impact, including the overall One-year Ahead inflation and Five-year Ahead inflation.
• Following the academic work by Alberto Cavallo of Harvard Business School (2020) and the UK Office of National Statistics (ONS), respondents were asked if there were any substantive changes to their consumption basket. In March 2022, results suggest there is no change in most of the components, exceptions being Housing and Utilities and Household Durables and Services – both of which are expected to see limited increase. This perhaps indicates that after two years since the pandemic was first declared, Singaporeans are getting used to the new normal and their component-wise monthly expenditures remain relatively stable even in the face of new waves and new restrictions. However, the recent surge in utility costs together with services related cost increase due to a tight labor market might have increased household expenditure for those components.
• Excluding accommodation and private road transportation related costs, the One-year-Ahead CPIEx core inflation expectations saw an increase from 3.1% in December 2021 to 3.9% in March 2022, charting the increase in the headline inflation expectations.
• For a subgroup of the population who owns their accommodation and uses public transport, the One-year-Ahead CPIEx core inflation expectations increased from 2.9% in December 2021 to 3.9% in March 2022. This sub-sample measurement is potentially more accurate than the full sample measurement, as the respondents truly face the MAS Core Inflation on a day-to-day basis. As expected, the level confirms the increase in the MAS Core Inflation expectations based on the polled data.   
• The One-year-Ahead composite index of inflation expectations, SInDEx1, that puts less weight on more volatile components like accommodation, private road transport, food and energy related expenses polled at 4.0% in March 2022, an increase from the 3.2% figure polled in December 2021 and the highest since September 2012. It is significantly higher than the first quarter average SInDEx of 3.3% since the survey’s inception in 2012.
• In March 2022, around 73% of the survey respondents reported their belief that Covid-19’s impact on growth would be significant compared to lower proportion at 59% in December 2021. The share of survey respondents who feel that Covid-19 will have long-term impact on inflation similarly increased to around 74%, from about 59% in December 2021. Both results indicate that with the emergence of the Omicron variant, new infections albeit generally milder and push towards reopening, new waves and some continued constraints on normal life are being accepted as “the new normal” of an endemic Covid-19.
• In addition, around 12.1% of the Singaporeans polled expect a more than 5% reduction in salary in the next 12 months slightly worse compared to 10.4% in December 2021. However, the median salary increment expectation was an increase by 1-5%, an improvement from the previous poll in December 2021.
• As a measure of the tradeoff between prioritising economic growth compared to the cost to life, the so-called livelihood over life debate, the ratio was 3.3 in March 2022, higher than 2.6 in December 2021. This means for every person who prioritised life over livelihood, there are more than three who prioritised livelihood over life. This also indicates a level of divergence among Singaporeans, some who feel the economy should be reopened fully to generate some semblance of growth and creating jobs while others feel that protecting lives should be considered with utmost priority particularly given the high level of vaccination.

DBS Chief Economist and Managing Director of Group Research, Dr. Taimur Baig commented, “In line with global developments, both actual and expected inflation have picked up in Singapore. Sharp rise in food, fuel, and rents are now a global phenomenon, although the rates of increases in Singapore are more modest compared to what’s seen in the US and Europe. We think that credible policy action by the MAS will keep expectations moderate in Singapore, although the chance of expectations going back to long-term trend levels in the near-term is low. Under these circumstances of sustained price pressure, further steepening of the nominal exchange rate band by Singapore’s central bank looks justified, in our view.”

SKBI Director Professor Dave Fernandez commented, “Inflation expectations, reported inflation, and central banks are all on the move, both in Singapore and globally. Therefore, all inflation datapoints, including the ones from our survey, should be monitored closely.”

SMU Assistant Professor of Finance and founding Principal Investigator of the DBS-SKBI SInDEx Project, Aurobindo Ghosh highlighted, “It may sound like a cliché but the global inflation has been caught in a perfect storm. The reasons are manifold including disrupted reopening from the Covid-19 pandemic in major global cities like Shanghai, cyclical increase in both hard and soft commodity prices exacerbated by strife in two of the largest global exporters of food grain, continuing supply chain disruptions increasing freight time and cost, and finally, impending normalization from accommodative monetary policy which has together bought US inflation rate to 40-year highs at 8.5% in March 2022. Singapore being a small open economy is vulnerable to all these risk factors. So, it’s not surprising One-year Ahead headline and core inflation expectations jumped to over 4% for the first time in 9 years of SInDEx survey.”

“Responding to global cues, before the conflict in Ukraine, the Monetary Authority of Singapore already tightened their exchange rate based monetary policy in January 2022 and then again in April 2022 in a pre-emptive move to preclude the prospect of unhinged or unanchored inflation expectations. However, the impact of passthrough costs like rental, distribution and labour costs in a tight labour market are harder to mitigate even with the appreciating Singapore dollar against a trade weighted basket of currencies. Respondents to the survey in March 2022, corroborating academic work by Cavallo (2020), opined that their consumption basket has slightly higher expense due to energy and service costs, although impact on direct Covid-19 related expenses seem to have subsided.,” Prof Ghosh reflected.

For the longer horizon, the Five-year-Ahead CPIEx inflation expectations increased in March 2022 to 4.8% from 3.8% in December 2021. The current polled number is higher than the first quarter average of 4.1% since the survey’s inception in 2012.

The Five-year-Ahead CPIEx core inflation expectations (excluding accommodation and private road transportation related costs) also increased to 4.6% in March 2022 from 3.6% in December 2021. Overall, the composite Five-year-Ahead SInDEx5 also increased to 4.8% in March 2022, from 3.7% in December 2021. In comparison, the current polled numbers are a bit higher than the first quarter average value (since the survey’s inception in 2011 till 2021) of the composite Five-year-Ahead SInDEx5 of 3.9%.

“The silver lining for the dark cloud of higher inflation expectations is the world attention seem to be descending on inflation and steps are being taken to mitigate inflation risks, such as the releasing of a million barrel a day from strategic petroleum reserves by the US administration to ease the pressure on oil prices. In the wake of Russian aggression in Ukraine, Western European countries are also weaning off Russian oil and gas. This also might give a strong fillip towards transitioning out of fossil fuel, even though in the short to medium term higher petroleum prices, and hence bigger incentive towards alternatives is expected. For the long term, inflation expectations also seem to be swayed by the conflict and consequent price increases. In other words, there seem to be more significant structural concerns related to the impact of geopolitics on prices. This needs to be addressed for longer term anchoring of inflation expectations.  Finally, on the pandemic front, our live-vs-livelihood debate seems to signal that, with widespread vaccination and boosting, even with the more transmissible but less virulent Omicron variant, for every one person who selects life over livelihood, over three respondents support the government’s push towards opening up the economy.”   Prof Ghosh commented.

These are the research findings of the 44th 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 reduced to 3.9% in June 2022, compared to 4.1% in March 2022. Headline inflation expectation saw a dip in the upward trend since September 2020. However, it is still a higher reading than the historical (2012-2021) second quarter average of 3.3%, and just shy of the 4% rate exceeded in March 2022, for the first time since December 2012.
• As a comparison benchmark, the Monetary Authority of Singapore Survey of Professional Forecasters (MAS SPF) data released in June 2022 showed that the median forecasts of CPI All-Items inflation for 2023 was 3% and MAS Core inflation was 2.8%. The latest release from Department of Statistics showed that average CPI-All Items in January–May i2022 was 5.0%, compared to the same period in 2021, while the latest May 2022 monthly inflation was 5.6%, year on year. On 14 July 2022, MAS further tightened monetary policy in an off-cycle move by re-centring the mid-point of the S$ nominal effective exchange rate (S$NEER) policy band up to its prevailing rate. This was the fourth consecutive tightening move since October 2021. It sought to build on previous monetary policy tightening moves to slow the momentum of inflation and ensure medium-term price stability.
• The overall CPIEx Inflation Expectations, after adjusting for potential component-wise behavioural biases and re-combining across components, slightly decreased to 5.5% in June 2022 from 5.7% in March 2022. Inflation expectations of all individual components remained the same as the last quarter at 5.0%, except Transportation inflation which saw a slight decline in inflation expectations to 8.0% from 9.0% polled in the March 2022 survey.
• We also observed that the free response behaviourally adjusted overall inflation expectations remained at 5.0% in June 2022, unchanged from March 2022. Multiple global factors and ground realities faced by consumers seem to be the main drivers of such expectations formation adjusting for behavioural bias like “anchoring bias.”
• In the June 2022 wave, we took a more forward looking approach to analyse the impact of global economic developments on Singapore’s economic growth and inflation.

    - Overall, despite policy stabilisation to assuage the impact of the pandemic, given the global uncertainty and economic disruptions, Singaporean consumers felt that the pandemic will have a moderately negative impact on Singapore’s economic growth.

    - Singaporean consumers also felt they will have to dole out slightly higher amount on spending owing mainly to price increases despite possible cutbacks on consumption.

     - We found that the impact on inflation for Transport, Healthcare, Housing is expected to be slightly negative.

    - In addition, the impact on overall One-year- Ahead inflation and Five-year -Ahead inflation is expected toto be negative but limited.

    - There is however some divergence among respondents regarding the impact on inflation expectations for certain components including food, healthcare, clothing & footwear, where we find a distinct bimodal distribution.

• Following the academic work by Alberto Cavallo of Harvard Business School (2020) and the UK Office of National Statistics (ONS), respondents were asked if there were any substantive changes to their consumption basket. In June 2022, results suggest there is no change in most of the components, exceptions being Food, Housing and Utilities and Household Durables and Services - which are expected to see limited increase. This perhaps indicates that even though their One-year-Ahead inflation expectations are somewhat reducing, their allocation to consumption basket will increase, for these specific components. The overall impact might increase their spending slightly as is reflected in the analysis.
• Excluding accommodation and private road transportation related costs, the One-year-Ahead CPIEx core inflation expectations remained at 3.9% in June 2022, similar to overall inflation expectations.
• For a subgroup of the population who owns their accommodation and uses public transport, the One-year-Ahead CPIEx core inflation expectations reduced from 3.9% in March 2022 to 3.8% in June 2022. This sub-sample measurement is potentially more representative than the full sample measurement, due to high homeownership and public transport ridership in Singapore. This downward paring though is marginal and the level is in line with the overall inflation expectations and has been largely flat, despite strong growth in housing prices leading to further property cooling measures from policymakers in December 2021.
• The One-year-Ahead composite index SInDEx1 that puts less weight on more volatile components like accommodation, private road transport, food and energy related expenses polled at 3.9% in March 2022, a slight decrease from the 4.0% figure polled in March 2022. It is significantly higher than the average of 3.3% since the survey’s inception in 2012 till 2021.
• In addition, around 11.5% of the Singaporeans polled expect a more than 5.0% reduction in salary in the next 12 months. This is a lower proportion compared to 12.1% in March 2022. The median salary increment expectation changed to an increase by 1.0-5.0%
• As a measure of the tradeoff between prioritising economic growth compared to the cost to life, the so-called livelihood over life debate, the ratio was 3.4 in June 2022, higher than 3.3 in March 2022. This means for every person who prioritised life over livelihood, there are more than three who prioritised livelihood over life. This also indicates the level of divergence among Singaporeans - some feel the economy should be reopened fully to generate some semblance of growth and create jobs; while others feel that protecting lives should be given utmost priority, but this group is reducing a little and is stabilising.

DBS Chief Economist and Managing Director of Group Research, Dr. Taimur Baig commented, “Globally, Inflation has proven to be higher and stickier than considered likely even a few months ago, but that has yet to undermine long-term anchoring of inflation expectation in industrial economies. Singapore has been no exception, where inflation expectations have incorporated recent developments, but survey respondents express no particular alarm over the prospects of price movements in the long-run. The MAS, with its spate of four policy tightening measures since last October, has shown its resolve to keep inflation steady by deploying its suite of tools. A combination of stronger Singapore dollar, tighter domestic liquidity, and macro prudential measures in place would go a long way in keeping inflation expectations anchored, in our view.”

SKBI Director Professor Dave Fernandez commented, “With actual inflation printing higher, central bankers and markets are paying close attention to all measures of inflation expectations. Notably, in the US, after raising the Fed Funds target by 75bp, Chair Powell specifically cited the University of Michigan inflation expectations survey, saying the June reading was “quite eye-catching and we noticed that.” So far, Singapore’s inflation expectations have risen but remain anchored. The clear risk is that, without vigilant policy actions, current price pressures could bleed into expectations, making it more likely that inflation becomes more persistent.”

SMU Assistant Professor of Finance and founding Principal Investigator of the DBS-SKBI SInDEx Project, Aurobindo Ghosh highlighted, “The global economy is at a crossroads. An ominous ‘stagflation’ scenario can be detrimental to global growth even if a global recession is averted warned the World Bank in its June 2022 Global Economic Prospects report. Being a small open economy, Singapore is fairly exposed to all the headwinds afflicting the global economy including the supply chain disruptions as well as the Ukraine-Russia conflict which are escalating global inflation as evidenced from four decade high inflation in the US and have darkened global growth outlook as is evident from the stuttering growth in major economies like China. Preemptive tightening of monetary policy by the Monetary Authority of Singapore might have dampened the unhinged increase in inflation expectations, as the DBS-SKBI SInDEx inflation expectations survey suggests. However, the heightened level of uncertainty rising from the continuing conflict in Ukraine is having a debilitating impact on global production of food grains and other commodities, increase in global oil prices and potential slowdown in major economies. These might have caused the free response behaviourally adjusted inflation expectations to be significantly higher, particularly due to cognitive biases in surveys. This cognitive dissonance is reduced when we look at those respondents with higher levels of financial literacy having slightly lower inflation expectations.”

For the longer horizon, the Five-year-Ahead CPIEx inflation expectations decreased from 4.8% in the March 2022 survey to 4.5% in June 2022. The current polled number is higher than the second quarter average of 4.0% since the survey’s inception in 2012 till 2021.

The Five-year-Ahead CPIEx core inflation expectations (excluding accommodation and private road transportation related costs) also decreased to 4.3% in June 2021 from 4.6% in March 2022. Overall, the composite Five-year-Ahead SInDEx5 also decreased to 4.4% in March 2022, from 4.8% in March 2022. In comparison, the second quarter average value (since the survey’s inception in 2012 till 2021) of the composite Five-year-Ahead SInDEx5 is 3.9%.

“There are some silver linings to the generally gloomy global economic outlook. First, we find that compared to March 2022 survey, the June 2022 survey showed a decline in the long term 5-year-Ahead inflation expectations though still above the historical average. Second, there is more stabilisation in the life vs livelihood debate where for every person choosing life over livelihood, about 3.4 choose livelihood over life, almost unchanged from the March 2022 survey. Finally, the survey indicated that while Singaporeans feel overall economic growth will be dampened moderately in the medium term, they are expecting that some price increases might lead to slightly higher expense with some adjustment in consumption baskets. This is signalling that we have approached a new normal of endemic Covid-19 and hopefully some degree of anchoring of long term inflation expectations,” Prof Ghosh commented.