(Sinagpore 20 March 2023) Available measures indicate that Singapore’s longer-term inflation expectations remain well anchored, said Mr Alvin Tan, Minister of State for the Ministry of Culture, Community and Youth, and the Ministry of Trade & Industry, said in an oral reply to Parliament Question.
He said the five-year ahead inflation forecasts of economists and professional forecasters have been broadly unchanged over the past two years.
“While households’ longer-term inflation expectations picked up in late 2021 to early 2022 alongside the rise in global and domestic inflation, the latest survey from December showed that expectations have fallen to close to their historical levels. ”
The stabilisation of households’ longer-term inflation expectations occurred alongside a similar outturn in actual inflation in late 2022. Year-on-year, MAS Core Inflation remained unchanged at 5.1% in Q4 2022 compared to Q3, after rising continuously since Q1 2021. On a month-on-month basis, the pace of increase in core prices has trended down over the second half of 2022.
He said MAS, like other central banks, will continue to focus on stabilising near-term inflation and price expectations, as these weigh heavily in the formation of longer-term inflation expectations.
As the Member observed, multiple factors will influence the path of global, regional, and domestic inflation over the longer term. Among them: demographics, technological advances that impact productivity, future trends in globalisation, and central banks’ commitments to ensure low and stable inflation in their economies.
“These factors can potentially boost or dampen inflation. There is therefore uncertainty and a significant diversity of views among central bankers, academics, and analysts on the likely inflation trends in the long term,” he said.
He also reassured Members that MAS is closely monitoring and assessing these developments, and is unwavering in its objective of securing price stability for sustainable growth.