Singapore’s core inflation inches up to 0.4% in September, above forecasts
Headline inflation picks up to 0.7%, from 0.5% in August
[SINGAPORE] Economists expect monetary policy to stay unchanged next January, as core and headline inflation came in higher than expected in September.
This was driven by an increase in the prices of retail and other goods, data from the Department of Statistics showed on Thursday (Oct 23).
September’s core inflation, which excludes accommodation and private transport, was 0.4 per cent. This was more than the 0.3 per cent in August and the median forecast of 0.2 per cent by private-sector economists polled by Bloomberg.
Meanwhile, headline inflation picked up to 0.7 per cent in September, from 0.5 per cent in August and above economists’ median forecast of 0.6 per cent.
On a month-on-month basis, the overall consumer price index (CPI) edged up by 0.4 per cent in September, while core CPI rose by 0.3 per cent.
The Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) maintained their official full-year forecasts, with core inflation to come in at 0.5 per cent and headline inflation to average 0.5 to 1 per cent.
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In a joint statement on Thursday, they noted that Singapore’s imported costs should “continue to decline, albeit at a slower pace in the months ahead”.
“Global crude oil prices are projected to fall more gradually in 2026 compared to 2025, while regional inflation should pick up modestly after the weak outturns this year.”
On the domestic front, administrative factors temporarily dampening inflation are expected to taper over the coming quarters.
Unit labour cost growth should increase as productivity growth normalises, while private consumption demand is likely to hold steady, they added.
MAS and MTI took these factors into account in their projections for 2025’s core and headline inflation. Both core and headline inflation were previously expected to arrive in the range of 0.5 to 1.5 per cent in 2025, before MAS narrowed its forecast earlier in October.
For 2026, they expect both core and headline inflation to rise to the range of 0.5 to 1.5 per cent.
Bottoming out
Economists said September’s data signals a bottoming out, with inflation expected to gradually rise over the coming months.
They generally kept their 2025 forecasts for both core and headline inflation within the official range.
In line with the authorities’ expectations, DBS, OCBC and Maybank kept their full-year core inflation forecast at 0.5 per cent; on the other hand, UOB raised its forecast to 0.6 per cent.
For headline inflation, estimates ranged from 0.7 per cent by OCBC, to 0.8 per cent by both DBS and Maybank, to 0.9 per cent by UOB.
For 2026, core inflation projections ranged from 1 per cent by DBS, to 1.1 per cent by Maybank, to 1.3 per cent by UOB. OCBC did not provide estimates.
Both DBS and Maybank are projecting headline inflation to come in at 1.2 per cent, while UOB is forecasting 1.7 per cent – just outside the official forecast range.
Maybank economists Chua Hak Bin and Brian Lee expect inflation to rise from October “as the disinflationary impact of sizeable healthcare subsidies introduced last year drops out and household electricity tariffs increase”.
They also noted the hike of certain administrative prices in 2026 including public transport fares and airfares, while disinflation from falling import costs is likely to taper “as low base effects kick in for oil prices and travel-related inflation”.
MAS and MTI said that the inflation outlook “is subject to uncertainties”, adding that supply shocks “could lift some imported costs abruptly”.
However, they pointed out that a sharper-than-expected weakening in global demand could keep core inflation lower for longer, while another significant decline in global oil prices could temporarily suppress the pace of price increases.
Economists expect no adjustments to monetary policy at the next meeting in January 2026.
In October’s quarterly policy meeting, MAS kept monetary policy settings unchanged for the second straight time.
“The current policy settings offers MAS greater flexibility to respond accordingly to dual-sided risks to both growth and inflation, while allowing for adjustments in the S$NEER within the band parameters,” said UOB associate economist Jester Koh.
DBS senior economist Chua Han Teng noted that MAS’ prevailing S$NEER (Singapore dollar nominal effective exchange rate) policy settings “are consistent” with its expectations for a gradual rise in core and headline inflation from Q4 2025, as well as a narrowing of 2025’s positive output gap to around 0 per cent 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 added.
On the other hand, Standard Chartered chief economist Edward Lee flagged the authorities’ “uncertainty in tone” and said it may indicate scope for further monetary policy easing.
“MAS may be reminding that the door to further easing is not closed, considering the better than expected growth so far and even as inflation may pick up ahead, given the high uncertainty,” he explained.
Key CPI categories
Accommodation inflation was unchanged at 0.4 per cent in September, as the pace of increase in housing rents remained the same as in the previous month.
Food inflation was also unchanged at 1.1 per cent, as a moderation in non-cooked food inflation was offset by a pickup in food services inflation.
Meanwhile, services inflation eased to 0.3 per cent, from 0.4 per cent in the previous month. This was attributed to a smaller increase in health insurance costs and a larger decline in information and communication services prices.
Private transport inflation rose to 3.7 per cent, from 2.4 per cent in August. This was due to a steeper increase in car prices.
Inflation in the retail and other goods category increased to 0.3 per cent, reversing from August’s minus 0.2 per cent. This was on account of a rise in the prices of furniture and appliances for personal care.
Electricity and gas prices fell more steeply by 5.8 per cent, compared with August’s 5.7 per cent drop, due to a sharper decline in electricity prices.
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