SINGAPORE: Singapore’s core inflation eased to 2 per cent year-on-year in September, down from 2.2 per cent in August, according to official figures released on Friday (Oct 23).
This was because of lower inflation in services, retail and other goods and private transport, the Monetary Authority of Singapore (MAS) and Ministry of Energy, Trade and Industry (METI) said in a joint media release.
Core prices, which exclude accommodation and private transport, rose by 0.1 per cent month-on-month in September.
Overall inflation, as measured by the Consumer Price Index-All Items, fell to 2.2 per cent year-on-year in September from 2.3 per cent in August, due to lower core inflation and private transport inflation.
On a month-on-month basis, overall inflation – which excludes non-consumption expenditures such as purchases of houses, shares and other financial assets and income taxes – rose by 0.2 per cent in September.
SECTORS
Official data released on Friday showed that services inflation eased to 1.7 per cent in September from 2 per cent in August due to a smaller increase in point-to-point transport service costs and a larger decline in telecommunication service prices.
Retail and other goods inflation also moderated to 1.2 per cent in September from 1.8 per cent in August as furniture prices declined and clothing prices rose at a slower pace.
Private transport inflation also fell to 7.1 per cent in September from 7.5 per cent in August due to a more gradual increase in car prices.
Electricity and gas inflation was unchanged at 8.7 per cent as prices rose at a similar pace in both September and August.
MAS and METI noted that the regulated electricity tariff for each quarter is set based largely on the average natural gas prices in the first two and a half months of the preceding quarter, among other factors.
“The increase in the regulated electricity tariff in the third quarter of 2026 is thus the result of the spike in global energy prices over the period of April to mid-June 2026,” the authorities said.
Accommodation inflation edged up to 0.9 per cent in September from 0.8 per cent in August, with housing rents increasing at a faster pace.
Food inflation also rose to 2.4 per cent in September from 2.3 per cent in August due to higher inflation in both non-cooked food and food services.
OUTLOOK
The authorities said that imported cost pressures are expected to remain firm for Singapore in the near term.
“Energy commodity prices have risen anew and are projected to remain high in the near term,” said MAS and METI.
“Global and regional food prices are also expected to pick up as costlier inputs and adverse weather patterns affect food production.”
But imported inflation should ease over 2027 as the effects of temporary supply disruptions fade, the authorities added.
On the domestic front, price pressures are likely to stay subdued, with unit labour costs in the services sector expected to remain contained amid continued productivity gains, MAS and METI said.
Enhanced government subsidies, such as for healthcare and education, will also dampen services inflation, the authorities added.
Taking into account these factors, core inflation and overall inflation are expected to remain slightly elevated in the immediate quarters ahead before easing more discernibly from mid-2027.
Core inflation is expected to average 1.5 per cent to 2 per cent in 2026, in line with MAS' full-year forecast range. It is also expected to average 1.5 per cent to 2.5 per cent in 2027.
Overall inflation is expected at around 2 per cent in 2026 and 1.5 per cent to 2.5 per cent in 2027.
“The risks to inflation remain tilted to the upside. A sharp and sustained surge in global energy or food prices could lift Singapore’s import costs by more than projected,” MAS and METI said.
Domestic inflation could also stay elevated if spillovers from the artificial intelligence-related boom broaden and unit labour costs rise more rapidly, the authorities added.
“However, higher-than-expected global interest rates or a pullback in AI-related investment could exert a drag on growth, and thus, inflation,” MAS and METI said.
“Energy production and shipments from the Middle East could also recover more quickly than projected, resulting in a greater decline in energy prices.”