From Pip to Price Tags: A Tale of Inflation Expectations in Singapore

How do expectations of inflation influence the way Singaporeans spend their money? In this episode, Professor Sumit Agarwal engages with NTU’s Assistant Professor Chua Yeow Hwee to delve into the concept of the "upgrading channel," which examines the relationship between inflation expectations and consumer spending patterns.

The Upgrading Channel and Spending Behavior

Assistant Professor Yeow Hwee presents intriguing findings from an experiment comparing Wall’s and Haagen-Dazs ice cream brands. By analyzing data from Nielsen’s Home Scan panel and survey results, he investigates whether consumers’ expectations of future inflation affect their choice between higher-quality, more expensive products and cheaper alternatives.

Quality vs. Price: The Inflation Connection

The episode explores how consumers’ perceptions of rising prices might drive them to either upgrade their purchases to higher-quality goods or stick to lower-priced items. The discussion reveals insights into how inflation expectations can shape spending behavior and potentially influence overall inflation trends.

This episode offers valuable insights into the dynamics of consumer behavior in the face of inflation and how expectations can impact spending decisions.