Restaurants and bars in Singapore’s Boat Quay area on Wednesday, May 17, 2023.
Bloomberg | Bloomberg | Getty Images
Singapore’s inflation rate rose for the second consecutive month compared to the same month last year, with October’s price increase rate hitting its highest level in about a year and exceeding analysts’ expectations.
After hitting a four-year low in August, consumer prices rose 1.2% to the highest level since August 2024. That compares with the average estimate of a 0.9% rise in economists polled by Reuters and a 0.7% rise in September.
The city-state’s core inflation rate, which deducts the prices of accommodation and private transport, also rose from 0.4% to 1.2%, compared with the 0.7% expected in a Reuters poll.
On a month-on-month basis, the consumer price index was flat and the core inflation rate was 0.5% month-on-month.
Headline inflation was driven by a 3.4% increase in transport prices, in addition to an increase in core inflation. Medical expenses also increased significantly by 4%.
According to the Ministry of International Trade and Industry, the rise in core inflation is due to higher inflation in sectors such as services, food and retail, as well as a gradual decline in electricity and gas prices.
Xavier Wong, a market analyst at investment and trading firm eToro, said the numbers were “not alarming” but “enough to raise some eyebrows.”
However, Wong noted that headline inflation is driven by some categories such as healthcare and private transportation, and there is no broad-based inflation acceleration.
He said domestic demand remained cautious. “People are still spending, they just don’t have the confidence to push prices up. Until that changes, it’s hard to see broad-based inflation picking up on its own.”
The inflation figures came after Singapore reported strong third-quarter GDP numbers on Friday and revised its economic growth forecast upward to 4% from 1.5-2.5%.
Economic growth in the third quarter exceeded expectations at 4.2% year-on-year, extending the 4.7% expansion seen in the second quarter. Singapore’s Ministry of Trade and Industry said global economic conditions were more resilient than expected, but warned that growth was likely to slow in 2026 as US tariffs weigh on global demand.
Singapore has a trade deficit with the US, and despite having a free trade agreement dating back to 2004, Singapore’s exports to the US are subject to a basic tariff of 10%.
The country’s economy is highly dependent on trade, and according to World Bank data, Singapore’s trade-to-GDP ratio will exceed 320% in 2024.
In the third quarter, Singapore recorded a 3.3% decline in non-oil domestic exports (NODX) compared to the same period last year, dragged down by sluggish exports of pharmaceuticals and petrochemical products.
However, NODX soared 22.2% year-on-year in October, driven by non-monetary gold and electronic goods exports.
The Monetary Authority of Singapore predicts the inflation rate in 2025 to be around 0.5% to 1%.
MAS left monetary policy unchanged at its October meeting, saying Singapore’s economic growth was stronger than expected.
Chua Hak Bin, regional co-head of macro research at Maybank, told CNBC that both core and headline inflation were below 1% in 2025, but are likely to exceed 1% in 2026.
He said this was due to upcoming public transport fare increases, carbon tax hikes and a new sustainable fuel tax on airline tickets.
Higher consumer prices will be driven by strong economic growth, lower interest rates and increased credit growth, Chua added.
—CNBC’s Anniek Bao contributed to this report.
