Official forecasts for core inflation remain unchanged, at 0.5 per cent in 2025 and 0.5 per cent to 1.5 per cent in 2026. - ST FILE
SINGAPORE: Singapore’s consumer prices held steady in November at the year’s high, with economists expecting inflation to continue rising modestly in 2026.
Core inflation, which excludes private transport and accommodation to better reflect household expenses, was 1.2 per cent in November, the highest since December 2024, according to official data released on Dec 23. Overall inflation also came in at 1.2 per cent.
Both measures were unchanged from October, when core inflation shot up from a near four-year low of 0.4 per cent in September.
But November’s core and overall inflation were lower than the 1.3 per cent that analysts polled by Bloomberg had forecast for each.
The month saw higher services inflation offset by lower retail and other goods inflation and a steeper decline in electricity and gas costs.
Services inflation edged up to 1.9 per cent from 1.8 per cent in October. This was due to larger increases in the costs of point-to-point transport services and health insurance, the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) said in a joint release.
Food inflation was unchanged at 1.2 per cent, as prices of food services and non-cooked food rose at the same pace as in October.
Retail and other goods inflation eased from 0.4 per cent in October to 0.3 per cent in November, as prices of clothing, footwear and other appliances for personal care declined.
Electricity and gas prices fell 4.1 per cent in November, from a 4 per cent decline in October, due to a larger drop in electricity costs.
Accommodation costs rose at 0.3 per cent in November, unchanged from October, as housing rents increased at a similar pace.
Zavier Wong, market analyst at eToro, said November’s inflation data does not suggest price pressures driven by strong demand.
“Price pressures are not exactly spreading, and neither are they accelerating in the parts of the basket that usually respond to improving confidence,” he said.
“What we’re seeing here is a continuation of adjustments that are sector-specific, and landing in areas that are harder for households to avoid, such as healthcare and transport.”
Wong also noted that inflation appears to reflect higher costs being passed on to consumers rather than strong domestic demand. This gives MAS room to remain patient on policy tightening.
“Inflation hasn’t gone away, but it also isn’t behaving in a way that typically forces a response,” he said.
“For households, the pressure can still feel very real because it’s concentrated in essentials rather than discretionary items... At the broader level, though, the signal remains one of containment rather than acceleration.”
Maybank economist Brian Lee noted that certain administrative prices are set to rise in 2026, including a 5 per cent increase in public transport fares from Dec 27, a new sustainable fuel levy on flight tickets ranging from $1 to $10.40 for economy passengers, and a higher carbon tax of $45 a tonne.
“We forecast core inflation to rise and average 1.3 per cent in 2026, with headline inflation averaging 1.4 per cent,” he said.
MAS and MTI reiterated their inflation forecasts for 2025 and 2026.
Core inflation is projected to come in at around 0.5 per cent in 2025 before rising to 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.
MAS and MTI cited several factors that should keep inflation within their forecasts, including expectations that Singapore’s import costs will decline, albeit at a slower pace, in the months ahead.
Global crude oil prices are projected to fall more gradually in 2026 compared with 2025.
Meanwhile, unit labour cost growth, which measures the average cost of labour per unit of output, is expected to increase. Private consumption demand is likely to remain steady.
MAS and MTI noted that the inflation outlook is subject to uncertainties.
“Supply shocks, including those stemming from geopolitical developments, could lift some imported costs abruptly,” they said.
“However, a sharper-than-expected weakening in global demand could keep core inflation lower for longer,” they added.
“Another significant decline in global oil prices could also temporarily tamp down the pace of price increases.”
OCBC Bank chief economist Selena Ling noted that the private-sector analysts’ median forecast for 2025 core inflation is 0.7 per cent, rising to 1.3 per cent in 2026, according to the MAS latest survey of professional forecasters.
The figures do not warrant a shift in the MAS’ monetary policy stance at the January review, as long as core inflation remains within its comfort range of 0.5 per cent to 1.5 per cent, she said.
“This is barring further tariff shocks, either from punitive sector-specific tariffs such as those on pharmaceuticals or semiconductors, or from an escalation in US-China tensions,” Ling said. - The Straits Times/ANN
