MasterCard and SMU Research Shows Fall in Expectations with Lingering Concerns Over Decline in Demand and Low Job Creation in Western Economies

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Singapore, 24 January 2013 – Singapore consumers are expecting inflation to fall as they perceive that a weak global economy would likely have a dampening effect on inflation, according to the latest findings of the SKBI-MasterCard Singapore Index of Inflation Expectations (SInDEx).

The SInDEx, which was jointly developed by Singapore Management University’s Sim Kee Boon Institute for Financial Economics (SKBI) and MasterCard Worldwide, is derived from an online survey of around 400 randomly selected individuals from Singapore households.

The online survey helps researchers understand the behaviour and sentiments of decision makers in Singapore households. This is the sixth wave of the quarterly survey conducted under the collaboration and the indices were officially launched in January 2012. SInDEx was developed by Dr. Aurobindo Ghosh and Professor Jun Yu from SMU SKBI, in collaboration with MasterCard.

In the latest survey conducted in December 2012, consumers shared their views on perceived values of economic variables over the next one to five years.

Comparing the two waves of surveys conducted in September and December 2012, consumers expect inflation to moderate in the next 12 months. Their perception of the One-year-Ahead headline inflation (CPI-All Items) dropped slightly from 4.57% in September to 4.37% in December. At the same time, the forward looking SInDEx1, a composite weighted index of One-year-Ahead inflation expectations decreased to 4.4% (from 4.57% in September).

The long term Five-year-Ahead overall (or CPI-All Items) Inflation expectations also dropped to 5.21% from 5.56% in September. The Five-year-Ahead Singapore Core Inflation rate (excluding accommodation and private transportation) also decreased slightly to 4.84% from 5.20% in the September wave.

The composite Five-year-Ahead Singapore Index of Inflation Expectations (SInDEx5) in December 2012 consequently decreased to 4.97% from 5.24% in the survey conducted in September 2012.

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Dr. Aurobindo Ghosh, co-creator of SInDEx, and Programme Director of SMU SKBI said, “Even though the United States possibly avoided falling off the fiscal cliff, many Eurozone economies are tittering on the brink of continued slowdown in productive activities and persistently high unemployment. This has created a downward pressure on global demand which in turn has manifested in low inflation rates in many Western and regional economies. Furthermore, low inflation has prompted policymakers to continue to adopt an expansionary monetary policy and more stimulus spending to kick start growth and employment generation. The concern of a spike in inflation expectations post the third sequel to Quantitative Easing (QE3) in the U.S. seems to have subsided somewhat, with the medium term inflation expectations in Singapore projected to come down in reaction to slowing trends in global demand.

“Over the last one year, the MAS Survey of Professional Forecasters (SPF) consensus forecast (currently at 4.7% for 2012) seems to be trailing previous quarters’ SInDEx inflation expectations numbers (currently, composite One-year-Ahead SInDEx1 is 4.4%), even though the SInDEx survey is conducted after every round of the SPF data release. In the medium term, despite the turmoil in the global economy, the SInDEx survey results have shown how grounded Singapore households are, so much so that even the professional forecasters with access to data and relevant market knowledge find it hard to beat their expectations.” Dr. Ghosh observed.

Dr. Yuwa Hedrick-Wong, global economic advisor, MasterCard Worldwide said, “Global economic recovery is stabilizing at a lower growth trajectory. Global demand as reflected by growth of world trade remains weak, which is an unfavourable external environment for many key markets in Asia/Pacific that are export-oriented. As a small, open, and tradeoriented economy, Singapore is also in a weaker position to leverage domestic demand for growth. Retaining its international competitiveness as a regional and global hub of finance and highend services is therefore crucial for Singapore. In this context, rising inflation in general and wage inflation in particular could have far reaching impacts; hence the SInDEx is an indispensable tool for getting the right balance in public policy going forward.”



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

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 to be a pioneer in Singapore for its interactive and technologically-enabled pedagogy of seminar-style teaching in small class sizes which remains its unique hallmark.

Home to about 8,000 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 business and other disciplines.

With an emphasis on generating rigorous, high impact cross-disciplinary research that addresses Asian issues of global relevance, SMU faculty collaborates with leading foreign researchers as well as partners in the business community and public sector through its research institutes and centres.  Through executive education, the university provides public and customised training for working professionals in meeting the needs of the economy.  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.  The SMU city campus is a state-of-the art facility located in the heart of downtown Singapore, fostering strategic linkages with the business and wider community.

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.

About MasterCard Worldwide

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. Follow us on Twitter @MasterCardNews, join the discussion on the Cashless Conversations Blog and subscribe for the latest news.


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,