Singapore’s Core Inflation Holds Steady at 1.2% in November

Singapore’s core inflation rate remained unchanged at 1.2% year-on-year in November 2023, according to data released by the Ministry of Trade and Industry (MTI) and the Monetary Authority of Singapore (MAS) on December 23. The stability in core inflation resulted from increased costs in the services sector being counterbalanced by reduced inflation in retail and other goods, as well as a significant decline in electricity and gas prices. This figure was lower than the median forecast of 1.3% from a Reuters poll of economists.

On a month-to-month basis, core inflation, which excludes accommodation and private transport, experienced a slight decrease of 0.1% in November. Overall inflation, measured by the Consumer Price Index-All Items (CPI-All Items), also held steady at 1.2% for the month, primarily due to the stability in both accommodation and core inflation. However, overall inflation saw a monthly rise of 0.2%, excluding expenditures on non-consumption items such as housing, shares, and taxes.

Sector Breakdown

Data revealed that services inflation increased to 1.9% in November from 1.8% in October. This rise was attributed to higher costs for point-to-point (P2P) transport services and health insurance. In contrast, electricity and gas prices saw a more pronounced decline in November, predominantly due to a larger drop in electricity costs.

Food inflation remained stable at 1.2% in November, as prices for food services and non-cooked food continued to rise at the same rate observed in October. Meanwhile, retail and other goods inflation dipped to 0.3% from 0.4% in October, influenced by falling prices for clothing, footwear, and personal care appliances. Private transport inflation lessened to 3.5% in November from 3.8% in the previous month, reflecting a smaller increase in car prices. Accommodation inflation remained constant at 0.3%, as housing rents increased at a similar rate in both months.

Future Projections

The MAS and MTI maintained their outlook from October, indicating that Singapore’s imported costs are expected to decline further, albeit at a slower pace in the coming months. They project that global crude oil prices will experience a gradual decrease in 2026, in contrast to the anticipated pace for 2025. Additionally, regional inflation is expected to improve modestly following a year of weak performance.

“On the domestic front, administrative factors temporarily dampening inflation are expected to continue tapering over the coming quarters,” stated officials from MAS and MTI. They indicated that unit labour cost growth is anticipated to rise as productivity growth normalizes, and private consumption demand is likely to remain stable.

In light of these factors, core inflation is projected to settle around 0.5% in 2025, with an increase to between 0.5% and 1.5% in 2026. Overall inflation is expected to average between 0.5% to 1% in 2025 and rise to between 0.5% and 1.5% in 2026.

Despite these projections, MAS and MTI cautioned that the inflation outlook remains uncertain. Supply shocks, particularly those arising from geopolitical events, could abruptly increase imported costs. Conversely, a more significant decline in global demand could sustain core inflation at lower levels for an extended period. Additionally, a substantial drop in global oil prices could temporarily reduce the pace of price increases in the market.