Singapore Core Inflation Eases to 2% in September as Authorities Project Stabilization
Singapore’s key consumer price gauge rose 2% in September from a year earlier, official data showed on Oct. 23, marking a slowdown that defied expectations of a slight pick-up and prompting diverging economic views across the financial sector.
The core inflation rate, which excludes private road transport and accommodation costs, dropped from 2.2% in August, according to the Singapore Department of Statistics. The reading came in below the median forecast of 2.3% in a Reuters poll. Overall headline inflation also cooled to 2.2% in September from 2.3% in August, driven by lower price increases in services, retail and other goods, and private transport.
September Price Slowdown Defies Initial Forecasts
The September consumer price data led some market watchers to lower their inflation forecasts following a joint release from the Monetary Authority of Singapore (MAS) and the Ministry of Energy, Trade and Industry (METI). DBS senior economist Chua Han Teng wrote in an Oct. 23 note that the numbers suggest “initial fears of a significant acceleration in inflationary pressures have not really played out.”
Underlying price pressures remain slightly elevated in the immediate future, according to MAS and METI, before moderating discernibly from mid-2027. Core inflation is expected to average 1.5% to 2% in 2026, aligning with the central bank’s full-year forecast range, and 1.5% to 2.5% in 2027. Headline inflation is projected at around 2% in 2026 and 1.5% to 2.5% in 2027.
Sector Breakdown of Goods and Services Costs
Private transport inflation slowed to 7.1% in September down from 7.5% in August, constrained by a more gradual increase in car prices. Accommodation inflation ticked up to 0.9% from August’s 0.8% as housing rents increased at a faster pace.
Services inflation fell to 1.7% in September from 2% in August due to smaller cost increases in point-to-point transport services and larger declines in telecommunication prices. Retail and other goods inflation dropped to 1.2% from 1.8%, as furniture prices declined and clothing prices rose more slowly. Food inflation edged up to 2.4% from 2.3% in August, driven by non-cooked food and food services. Electricity and gas prices remained unchanged at 8.7% for September.
Economists Divide over Potential Singapore Monetary Policy Changes
Economists remain divided on whether Singapore’s central bank will adjust monetary policy in the near term following the latest inflation prints. The central bank kept its policy unchanged during its October meeting, surprising private-sector analysts who anticipated a tightening move.
MAS and METI warned that risks to inflation remain tilted to the upside. A sharp and sustained surge in global energy or food prices could lift import costs beyond projections, while spillovers from the artificial intelligence-related boom could cause unit labour costs to rise more rapidly. Conversely, higher-than-expected global interest rates or a pullback in AI-related investment could drag down growth and inflation, according to the authorities. Maybank Investment Banking Group economist Brian Lee noted that while cost pressures remain acute for businesses, price increases are likely to stay restrained due to subdued consumer demand amid a cooling labour market.
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