Singapore core inflation edges up to 0.4% in September, above forecasts

SINGAPORE - Singapore’s consumer prices rose slightly more than expected in September, with economists expecting inflation to continue rising modestly.

Core inflation, which excludes private transport and accommodation costs to better represent household expenses, edged up to 0.4 per cent in September from the more than four-year low of 0.3 per cent in August.

This was higher than the 0.2 per cent forecast by analysts in a Bloomberg poll.

The rise in core inflation was driven by an increase in prices of retail and other goods, the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) said on Oct 23.

Overall inflation in September rose to 0.7 per cent from 0.5 per cent in August. This also topped the 0.6 per cent forecast in the Bloomberg poll.

Inflation is expected to rise in the coming months, analysts said.

OCBC Bank chief economist Selena Ling said: “Base effects did play a part. But prices also rose for transport, healthcare, food and education – mainly due to domestic price adjustments. Certificate of entitlement (COE) prices have rebounded in recent bidding exercises.”

Maybank analysts Brian Lee and Chua Hak Bin noted that household electricity tariffs have just increased, with other levies imminent, including a 5 per cent hike in public transport fares from Dec 27, and a new sustainable fuel levy on departing flights and higher carbon tax in 2026.

They added: “Disinflation from falling import costs will likely taper, as low base effects kick in for oil prices and travel-related inflation.”

On the demand side, falling interest rates and rising stock prices could also lift consumer spending and fan price pressures, the analysts added.

However, they also noted that the Government’s roll-out of enhanced public healthcare subsidies and lower pre-school fee caps in 2026 will dampen services inflation.

The rise in overall inflation in September was a result of higher private transport inflation, as well as the rise in core inflation, MAS and MTI said.

Private transport inflation rose because of a steeper increase in car prices, to 3.7 per cent in September from 2.4 per cent in August.

The Maybank analysts said car prices may continue to increase with rising COE premiums and lower purchase rebates for electric vehicles and hybrid cars.

The cost of retail and other goods also increased because of a rise in the prices of furniture and appliances for personal care. The inflation for this segment rose to 0.3 per cent in September, after coming in at minus 0.2 per cent in August.

In contrast, electricity and gas prices fell more steeply owing to a sharper decline in electricity prices.

Services inflation also eased because of a smaller increase in health insurance costs, as well as a larger decline in prices of information and communications services.

Accommodation inflation was unchanged as the pace of increase in housing rents remained the same as in August.

Food inflation was also unchanged as a moderation in non-cooked food inflation was offset by a pickup in food services inflation.

MAS and MTI said Singapore’s imported costs should continue to decline, but at a slower pace in the months ahead.

“Global crude oil prices are projected to fall more gradually in 2026 compared with 2025, while regional inflation should pick up modestly after the weak outturns this year,” they said.

On the domestic front, certain factors that temporarily dampen inflation are expected to taper over the coming quarters.

“Unit labour cost growth should begin to increase as productivity growth normalises, while private consumption demand is likely to remain steady,” MAS and MTI said.

MAS and MTI reiterated that core inflation is projected to come in at around 0.5 per cent in 2025, and to average between 0.5 per cent and 1.5 per cent in 2026.

Overall inflation is expected to average 0.5 per cent to 1 per cent in 2025, and 0.5 per cent to 1.5 per cent in 2026, said MAS and MTI.

But they also noted that the inflation outlook is subject to uncertainties.

“Supply shocks, including those stemming from geopolitical developments, could lift some imported costs abruptly,” MAS and MTI said.

“However, a sharper-than-expected weakening in global demand could keep core inflation lower for longer. Another significant decline in global oil prices could also temporarily tamp down the pace of price increases.”

DBS Bank senior economist Chua Han Teng said analysts’ expectations are aligned with the Government’s, and he projects inflation to remain at still-contained rates of 1 per cent and 1.2 per cent for core and overall inflation, respectively, in 2026.

“Against this backdrop, we see no urgency for the MAS to adjust policy, and it retains the option of an ‘insurance easing’ in 2026 amidst global uncertainties,” he said.