Prices rose by 4.3 per cent in the final month of last year, bringing inflation to 4.6 per cent for the whole of 2012.
The primary cause for the jump in inflation was accommodation and private road transport which accounted more than two-thirds of inflation.
Private road transport climbed 9.3 per cent in December, while accommodation shot up 8.5 per cent.
Take these out, and core inflation stood at about 1.9 per cent last month, down slightly from the 2 per cent recorded in November.
These two factors are likely to remain the biggest contributors to inflation this year, said the Trade and Industry Minister and the Monetary Authority of Singapore.
But the Government also flagged two key inflationary risks. One is food inflation which could spike as a result of weather disruptions, given that supply is tight.
The other is rising wages, from a tight labour market, which could spill over into consumer prices.
Inflation is tipped to range between 3.5 per cent and 4.5 per cent this year.