Singapore’s core inflation expected to rise in 2026 after cooling in 2025

SINGAPORE – Inflationary pressures are building in Singapore, analysts said, with prices of goods and services that households regularly use expected to rise in 2026.

The analysts were reacting to official figures released on Jan 23 by the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI).

The report showed that while core inflation on average fell significantly to 0.7 per cent for the whole of 2025, from 2.8 per cent in 2024, it picked up and stayed at 1.2 per cent in the last three months of the year.

That inflation momentum could accelerate in 2026 because of higher costs, including those of public transport and utilities, though businesses will be constrained in how much they can raise prices, the analysts said.

MAS and MTI also said that overall inflation averaged 0.9 per cent in 2025, a big drop from 2.4 per cent in 2024.

But they said core and overall inflation are projected to rise in 2026 from their low rates in 2025.

MAS and MTI did not reiterate their 2026 forecast for both measures to come in between 0.5 per cent and 1.5 per cent. Instead, in an indication that official forecasts might be raised, they said 2026 forecasts for both gauges will be updated in the upcoming monetary policy statement on Jan 29.

MAS and MTI added that Singapore could see greater price pressures in 2026 as imported costs decline at a slower pace and regional inflation picks up modestly. On the domestic front, labour costs could begin to increase while household demand remains steady, they said.

For December, core inflation stayed at 2025’s high of 1.2 per cent, unchanged from October and November. Overall inflation also held steady at 1.2 per cent.

HSBC’s ASEAN economist Yun Liu noted that 2025’s average core inflation overshot the official forecast of around 0.5 per cent. This suggests “a trend of a persistent pickup in inflation momentum”, she said.

Ms Liu expects core inflation to rise because of electricity tariffs, a carbon tax hike and a sustainable aviation fuel levy that will take effect in October.

Mr Khoon Goh, head of Asia research for ANZ, said core inflation should pick up from January as businesses start to pass on some of the costs by charging more.

However, Mr Zavier Wong, a market analyst at online broker eToro, said the overall inflation picture suggests that consumer spending remains subdued. This means companies may have limited scope to raise prices.

Nevertheless, he added that inflation is sticky because of a handful of persistent cost categories, which are essentials that households cannot easily cut back on.

Some examples, according to Department of Statistics (SingStat) data released on Jan 23, are rice and cereal products, for which prices rose 1.6 per cent in 2025 from a year ago; sugar, confectionery and desserts, which saw prices rise 3.8 per cent; and oils and fats, which saw price increases of 3.6 per cent.

DBS Bank senior economist Chua Han Teng said further price increases in 2026 are more likely to come from domestic factors like higher costs of services, rather than external factors like oil prices.

He expects MAS to raise its 2026 overall and core inflation forecasts to between 1 per cent and 2 per cent.

HSBC’s Ms Liu also expects MAS to upgrade its 2026 inflation forecasts, a sign that it is turning more hawkish or tougher on inflation.

A separate report from SingStat on Jan 23 looked deeper into the impact of inflation on different household income groups.

All household income types experienced smaller price increases in 2025, compared with 2024. The price increases were the smallest for households in the lowest 20 per cent income cohort, with overall inflation at 0.6 per cent.

Meanwhile, overall inflation was 0.9 per cent for middle-income earners and 1.2 per cent for top-income earners.

Excluding rents of owner-occupied accommodation, the price increase was 0.5 per cent for the lowest-income cohort, 0.9 per cent for the middle-income group and 1.4 per cent for the high-income group.

People who own their homes do not pay rent, so the consumer price index figure that excludes this outlay is more representative of the average household.

SingStat said the main contributors to inflation in 2025 were health insurance, food, accommodation, higher bus and train fares, and pricier cars. These inflationary pressures were offset by lower holiday expenses, cheaper electricity and a fall in the cost of information and communication services such as phone and internet.

The top earners felt the biggest pinch as they spent more on cars compared with those in the other income tiers, it added.