Singapore core inflation eases to 2%

Core and headline inflation cool in September

Singapore’s core inflation eased to 2 per cent year-on-year in September 2026, down from 2.2 per cent in August, marking a moderation from a recent high. Headline or overall inflation also edged down to 2.2 per cent from 2.3 per cent in the previous month. Both measures came in below earlier private-sector consensus estimates, which had pointed to stronger price gains, particularly for headline inflation. The easing was driven mainly by lower inflation in services, retail and other goods, and private transport.

On a month-on-month, seasonally adjusted basis, core consumer prices rose 0.1 per cent in September, while the all-items consumer price index increased 0.2 per cent. Overall inflation on a non-seasonally adjusted month-on-month basis also rose 0.2 per cent, slowing from a 0.6 per cent increase in August. These incremental monthly gains underline that price pressures remain present but are no longer accelerating as they did earlier in the year.

Sector breakdown of price movements

Services inflation eased to 1.7 per cent in September from 2 per cent in August, as point-to-point transport service costs rose more slowly and telecommunication service prices saw a larger decline. Retail and other goods inflation moderated to 1.2 per cent from 1.8 per cent, reflecting a fall in furniture prices and a slower pace of increase in clothing prices. Private transport inflation slowed to 7.1 per cent from 7.5 per cent, with car prices rising more gradually than in earlier months.

In contrast, some categories registered slightly faster price increases. Accommodation inflation inched up to 0.9 per cent from 0.8 per cent as housing rents increased at a faster pace. Food inflation rose to 2.4 per cent from 2.3 per cent, with higher inflation in both non-cooked food and food services. Electricity and gas inflation remained elevated and unchanged at 8.7 per cent, after a regulated electricity tariff increase earlier in 2026 and similar price gains in recent months.

Policy stance and official inflation forecasts

Monetary and fiscal authorities left their 2026 inflation forecasts unchanged following the latest data. Core inflation is projected to average between 1.5 and 2 per cent in 2026, while overall or headline inflation is expected to be around 2 per cent. For 2027, core inflation is forecast to average between 1.5 and 2.5 per cent, with overall inflation seen in a 1.5 to 2.5 per cent range. Officials expect both core and overall inflation to remain slightly elevated in the immediate quarters ahead before easing more discernibly from mid-2027.

Authorities assess that imported cost pressures will stay firm in the near term. Energy commodity prices have risen again and are projected to remain high, while global and regional food prices are expected to pick up as costlier inputs and adverse weather patterns affect production. However, imported inflation is anticipated to ease over 2027 as the impact of temporary supply disruptions fades.

Domestic price pressures and inflation risks

On the domestic front, price pressures are expected to remain subdued. Unit labour costs in the services sector are projected to stay contained amid continued productivity gains. Enhanced government subsidies, including those for healthcare and education, are expected to dampen services inflation and help limit the passthrough of higher costs to consumers.

Even with September’s moderation, policymakers judge that risks to inflation are tilted to the upside. A sharp and sustained surge in global energy or food prices could raise import costs more than projected and push inflation higher. Domestic inflation could also stay elevated if spillovers from the artificial intelligence-related boom broaden and unit labour costs rise more rapidly. Conversely, higher-than-expected global interest rates or a pullback in AI-related investment could weigh on growth and, in turn, on inflation.