Singapore Inflation Plummets in October: Core Rate Hits Lowest Since 2021

Singapore Inflation Update – October 2023

In October 2023, Singapore’s core and overall inflation rates fell more than expected. The decline is likely to continue into 2025.

Core Inflation

Core inflation decreased to 2.1% year-on-year from 2.8% in September. This rate equals the lowest level since December 2021. Economists had predicted a rate of 2.5%. DBS Bank economist Chua Han Teng noted that the last time core inflation dropped this significantly was in January 2013. He indicated that the earlier increases in August and September were temporary.

Overall Inflation

Overall inflation dropped to 1.4% year-on-year, the lowest since March 2021, down from 2% in September. This decline was attributed to slower accommodation costs and a significant drop in private transport expenses. Private transport costs fell by 2.5% in October, exceeding the 2.4% drop in September, mainly due to lower car prices.

On a month-to-month basis, both core and overall inflation eased by 0.3%. The Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) reported that prices for imported manufactured goods are declining, reflecting easing global inflation and a stronger Singapore dollar.

Future Predictions

Services inflation is expected to continue easing throughout 2024, aligning with slower wage growth. MAS and MTI forecast core inflation will remain around 2% for the last two months of 2024, averaging 2.5% to 3% for the entire year. This compares to an average of 4.2% in 2023. In 2025, core inflation may drop further to a range of 1.5% to 2.5%.

Overall inflation is anticipated to be about 2.5% for 2024, down from 4.8% in 2023. Accommodation inflation is expected to decrease in 2025, which may help balance out the expected rise in private transport inflation. Overall, inflation is predicted to average between 1.5% and 2.5% in 2025.