Singapore’s core Consumer Price Index (CPI) increased by 0.1% month-on-month in September, a slowdown from the 0.3% rises seen in July and August, according to UOB Global Economics and Markets Research. This softer-than-expected growth is attributed to unique factors such as intense competition among telecommunications companies and temporary discounts from interior design firms during the Hungry Ghost Festival.
Despite the modest increase, UOB warns of broadening inflationary pressures. Upstream and imported price pressures, indicated by the Domestic Supply Price Index (DSPI) and Import Price Index (IPI), have intensified beyond oil-related segments. This suggests a gradual pass-through to the broader CPI basket.
UOB maintains its 2026 core inflation forecast at 1.7% but has slightly lowered its 2027 projection to 2.1% from 2.2%. The Monetary Authority of Singapore (MAS) is expected to keep the current Singapore Dollar Nominal Effective Exchange Rate (S$NEER) slope settings through 2027. However, there is a risk of incremental tightening in early 2027.
Factors contributing to the inflation outlook include potential energy-related supply disruptions due to ongoing Middle East conflicts and rising Brent crude oil prices. UOB anticipates a 5.5% increase in electricity tariffs in the first quarter of 2027, assuming Brent prices remain above US$100 per barrel. Additionally, a 7% rise in bus and train fares in late December could push core inflation to peak at 2.4% year-on-year in January 2027, potentially exceeding MAS’ projections.
