ARDT

[SINGAPORE] Consumer prices increases slowed in September, with core and headline inflation easing slightly, data from the Monetary Authority of Singapore (MAS) and the Ministry of Energy, Trade and Industry (METI) showed on Friday (Oct 23).

Core inflation, which excludes accommodation and private transport, came in at 2 per cent last month, lower than August’s 2.2 per cent and below the median 2.3 per cent estimate in Bloomberg’s poll of private sector economists.

The increase in prices came on the back of lower inflation for services and retail and other goods.

Meanwhile, headline inflation edged down to 2.2 per cent in September, from 2.3 per cent the month before.

This was driven by lower private transport inflation, alongside lower core inflation.

The Bloomberg consensus estimate had been for headline inflation to hit 2.4 per cent.

On a month-on-month seasonally adjusted basis, core prices rose by 0.1 per cent, while the all-items consumer price index (CPI) grew 0.2 per cent in September.

The authorities maintained the official 2026 core inflation forecast at 1.5 to 2 per cent. It also kept its full-year headline inflation forecast of around 2 per cent.

Both projections had been revised during the central bank’s October monetary policy review, from 1.5 to 2.5 per cent.

MAS and METI expect imported cost pressures to remain firm for Singapore in the near term. Energy commodity prices have “risen anew” and should remain high in the near term, while global and regional food prices are also expected to pick up, with production affected by costlier inputs and adverse weather patterns.

But imported inflation is anticipated to ease over 2027 as the effects of temporary supply disruptions fade.

Domestically, the authorities think price pressures should stay subdued, with unit labour costs in the services sector expected to remain contained amid continued productivity gains.

“Enhanced government subsidies, such as for healthcare and education, will also dampen services inflation,” they said.

But risks to inflation remain tilted to the upside.

A sharp and sustained surge in global energy or food prices could cause a higher-than-projected increase in Singapore’s import costs.

If spillovers from the AI-related boom broaden and unit labour costs rise more rapidly, domestic inflation could also stay elevated.

“However, higher-than-expected global interest rates or a pullback in AI-related investment could exert a drag on growth, and thus, inflation.,” they added. “Energy production and shipments from the Middle East could also recover more quickly than projected, resulting in a greater decline in energy prices.”

Key CPI categories

In September, inflation trends across CPI categories were mixed.

Services inflation eased to 1.7 per cent, from 2 per cent, due to a smaller increase in point-to-point transport service costs and a larger decline in telecommunication service prices.

Retail and other goods inflation moderated to 1.2 per cent, from 1.8 per cent, as furniture prices declined and clothing prices rose at a slower pace.

Private transport inflation, at 7.1 per cent, down from 7.5 per cent, was lower due to a more gradual increase in car prices.

Meanwhile, electricity and gas inflation was unchanged at 8.7 per cent as electricity prices rose at a similar pace in September as in August.

And in contrast, accommodation inflation inched up to 0.9 per cent, compared with the preceding month’s 0.8 per cent, as housing rents increased at a faster pace.

Food inflation rose to 2.4 per cent, marginally higher than August’s 2.3 per cent, due to higher inflation in both non-cooked food and food services.