Singapore’s core inflation rate fell to 0.3% year-on-year in August, down from 0.5% in July, according to a report by Nomura Global Markets Research. This decline, driven by reduced service costs such as airfares and holiday expenses, was lower than both the consensus forecast of 0.5% and Nomura’s own prediction of 0.4%. As a result, Nomura has adjusted its 2025 core inflation forecast to 0.5%, the lower end of the Monetary Authority of Singapore’s (MAS) range of 0.5-1.5%.
The report highlights that headline inflation also decreased to 0.5% from 0.6% in July, with accommodation inflation easing slightly and private transport inflation rising due to increased car prices. Despite these changes, sequential headline inflation remained unchanged at 0.0% month-on-month.
Nomura’s analysis indicates that the share of disinflation within the core basket increased to 40.3% in August from 38.7% in July. This trend is attributed to a drop in holiday expense inflation and a slight rise in retail and other goods inflation. The firm expects core inflation to reach a low of 0.1% in September before gradually increasing.
Looking ahead, Nomura anticipates that the MAS will narrow its core inflation forecast range in its upcoming Monetary Policy Statement, expected by 14 October. Despite the subdued inflation figures, Nomura’s FX strategy team predicts that the MAS will maintain its current foreign exchange policy, citing a resilient growth outlook and stable labour market conditions.
