Singapore, 10 January 2012 – Inflation expectation is an important economic gauge for many Singaporeans and businesses. A new Index highlighting the spectrum of factors that impact the inflation expectations was jointly launched by MasterCard and Singapore Management University (SMU) today.

The SKBI-MasterCard Singapore Index of Inflation Expectations (SInDEx), which was jointly developed by Dr Aurobindo GHOSH and Professor Jun YU from SMU Sim Kee Boon Institute for Financial Economics (SKBI), and MasterCard, is based on a survey of around 400 randomly selected individuals from households in Singapore. The online survey helps researchers understand the behaviour and sentiments of decision makers in Singapore households.

Two surveys were conducted last year through the joint collaboration: one in September and another in the first week of December. In the first survey, consumers were asked a variety of demographic and socioeconomic questions. Consumers then shared their views on perceived values of economic variables over the next one to five years. In the second survey, questions pertaining to investors’ sentiment on current and future equity investments were added.

SMU President, Professor Arnoud De Meyer said, “For the past one year, inflation has been in the minds of many Singaporeans. Its movements affect how households, employers and central bankers make decisions. Understanding how inflation expectation are formed and its impact on various economic decisions is thus instrumental in any discourse on economic policy. It is with great pride that I introduce the inflation expectation index jointly developed by SMU SKBI and MasterCard. Since its launch in July 2008, SKBI has been developing and applying research on financial economics with special relevance to Singapore and Asia. The creation of the index is a great example to showcase how SKBI can help the industry and the public.”

“Inflation has been a pressing issue for governments, economists, businesses and consumers in the last year and its role as a tool of economic management has been discussed, analysed and debated in the media around the world,” said Vicky Bindra, president of Asia/Pacific, Middle East & Africa (APMEA) for MasterCard Worldwide.

“The SKBI-MasterCard Singapore Index of Inflation Expectations will be a valuable addition to this debate and its creation is a testament to the emphasis MasterCard places on working with highly credible and innovative organizations for the benefit of industry and society.”

For the current year, the SInDEx1 (which measures inflation expectations over one year) remained almost the same in both the September and December 2011 surveys at 4.62%. As for the next five years, SKBI-MasterCard Singapore Index of Inflation Expectations (SInDEx5, which measures inflation expectations over five years) decreased slightly from 5.2% in September to 5.16% in December.

The study found that in the medium term of one year, households’ awareness of the economic conditions played a crucial role in forming current expectations. One of the strongest and most persistent factors found to have influenced inflation expectations was the exposure to media coverage on global economic issues. Those who followed media reports were found to have a lower inflation expectation.

The study also found that inflation expectations were affected by the long term relationship of the individual through citizenship status or length of stay. For the long term (or five-year forecast), the level of confidence in future equity investment plays a crucial part in expectation formed by households. The level of uncertainty plays a significant role in periods of stress.

Dr. Yuwa Hedrick-Wong, global economic advisor, MasterCard Worldwide, said, “The massive debt overhang in many developed economies has made rising inflation a more serious and ever-present threat and the central banks’ task of maintaining price stability more challenging.”

“In 2012, for instance, governments in OECD countries will need to borrow an equivalent of 15% of world GDP. Thus, getting monetary policy right under such circumstances is critical in order to support economic growth while keeping inflation under control. A key insight in getting monetary policy right is a more precise estimate of inflation expectation, especially for a small and open economy like Singapore.”


Two indices were created, SInDEx1 and SInDEx5, to measure the 1-year inflation expectations and the 5-year inflation expectations. The data for the SKBI-MasterCard Survey was collected online from about 400 consumers. The sampling was done using a quota sample over gender, age and residency status to ensure representativeness of the sample. Employees in some sectors like journalism, marketing were excluded as that might have an effect on their responses to questions on consumption behaviour and expectations.

In the first wave, about 88% of the respondents were citizens and 99.3% have stayed in Singapore for more than two years. There is a slight decrease for both sets of respondents in the second wave. The median per capita personal income of the respondents in both waves is $37,500, while household income is on an average of $75,000 per annum.

About MasterCard

MasterCard (NYSE: MA) is a global payments and technology company.  It operates the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities—such as shopping, traveling, running a business and managing finances—easier, more secure and more efficient for everyone. Learn more at or follow us on Twitter @mastercardnews or join the conversation on The Heart of Commerce Blog.

About Singapore Management University

A premier university in Asia, the Singapore Management University (SMU) is internationally recognised for its world class research and distinguished teaching.  Established in 2000, SMU’s mission is to generate leading edge research with global impact and produce broad-based, creative and entrepreneurial leaders for the knowledge-based economy.  It is known for its interactive and technologically-enabled pedagogy of seminar-style teaching in small class sizes.

Home to over 7,000 students, SMU comprises six schools: School of Accountancy, Lee Kong Chian School of Business, School of Economics, School of Information Systems, School of Law and School of Social Sciences, offering a wide range of bachelor’s, master’s and PhD degree programmes in various disciplines.

With an emphasis on generating rigorous, high impact cross-disciplinary research that addresses Asian issues of global relevance, SMU faculty collaborates with leading international researchers as well as partners in the business community and public sector through its research institutes and centres.  The University also conducts executive education programmes for working professionals. Close relationships with leading universities, including The Wharton School, Carnegie Mellon, the University of Pennsylvania and the University of Chicago’s Booth School of Business, allow SMU to draw on their academic and research strengths in various collaborations.

  • About Sim Kee Boon Institute for Financial Economics

Established in July 2008, the Sim Kee Boon Institute for Financial Economics (SKBI) at the Singapore Management University promotes the study of Financial Economics and Financial Econometrics in areas of strategic relevance to Singapore’s economy and the economies of the region. A significant addition to Singapore’s efforts to be a financial hub in Asia, SKBI is a leading institute for academic research with strong industry application and practical dimension in the area of Financial Economics.

The Institute has four major research centres for quantitative financial analysis and offers training programmes for professionals in the financial industry. Its work is conducted in close collaboration with leading scholars in financial economics and financial econometrics from around the world as well as leading international organisations and experts from industry.

Media contacts:

Kong Hwee Ting, SMU +65 6808 5238,

Gladys Ng, SKBI, SMU + 65 6808 5229,

Georgette Tan, MasterCard Worldwide, +65 6390 5971,

Rob O’Brien, Weber Shandwick, +65 6825 8064,