Parliamentary Replies
Published Date: 20 March 2023

Oral reply to Parliamentary Question on Singapore's longer-term inflation expectations

Date: For Parliament Sitting on 20 March 2023

Name and Constituency of Member of Parliament

Mr Saktiandi Supaat, Bishan-Toa Payoh GRC


To ask the Prime Minister given the new normal of endemic COVID-19 and shifts in global inflation dynamics (a) whether Singapore’s long-term inflation expectations are well anchored; (b) whether there is the risk of de-anchoring of inflation returning to our long-term target in a timely manner under current challenging global macroeconomic and supply conditions; and (c) whether there is also a risk that our current estimates of long-term inflation have risen.

Answer by Mr Alvin Tan, Minister of State, Ministry of Trade and Industry and Ministry of Culture, Community and Youth, and Board member of MAS, on behalf of Mr Tharman Shanmugaratnam, Senior Minister and Minister in charge of MAS:

1. Available measures indicate that Singapore’s longer-term inflation expectations remain well anchored. 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. 

2. 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.

3. 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.

4. As the Member observed, multiple factors will influence the path of global, regional, and domestic inflation over the longer term. These include, for instance, 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. 

5. I would like to reassure Members that MAS is closely monitoring and assessing these developments, and is unwavering in its objective of securing price stability for sustainable growth.

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