High uncertainty fuels a divided inflation outlook among Singaporeans

The Singapore Index of Inflation Expectations (SInDEx) report, jointly released by DBS Group and SMU’s Sim Kee Boon Institute for Financial Economics (SKBI), shows that local residents' overall inflation forecast has decreased from 4% in March to 3.8% in June. Those anticipating a decline in inflation cited reasons such as high interest rates maintained by central banks (36%) and a slowdown in global economic growth (32%). Conversely, those expecting inflation to rise pointed to the prolonged high interest rates by major economies' central banks (29%) and geopolitical uncertainties from conflicts between Hamas and Israel, and Ukraine and Russia (24.5%). SMU Assistant Professor of Finance Aurobindo Ghosh, who is the founding Principal Investigator of the Quarterly DBS-SKBI SInDEx Project, noted that both perspectives regard global central bank policies as a significant factor affecting inflation trends. This cognitive bias prompts policymakers to delay interest rate normalisation measures to prevent a resurgence of inflation.