UOB Global Economics and Markets Research has adjusted its inflation forecasts for Singapore following recent announcements on electricity tariffs and public transport fares. The revisions come after SP Group revealed a 10.4% quarter-on-quarter decrease in regulated electricity tariffs for the fourth quarter of 2026, a sharper drop than the anticipated 3.9%. This decline follows a previous 17% increase in the third quarter.
The adjustments in forecasts are also influenced by the Public Transport Council’s decision to raise bus and train fares by 7% from 26 December, citing increased energy costs due to ongoing conflicts in the Middle East. The price of Brent crude oil has surged past $100 (US$100) per barrel, impacting various distillates like jet fuel and diesel.
In response to these developments, UOB has lowered its average core inflation forecast for 2026 to 1.7%, down from 1.8%. However, the bank has raised its 2027 forecast to 2.2%, up from 2.1%, anticipating a rise in electricity tariffs and the impact of increased transport fares in early 2027. Headline inflation is projected at 2.0% for 2026 and 2.4% for 2027.
UOB also noted intensified upstream cost pressures, with the Domestic Supply Price Index accelerating to 38.8% year-on-year in August 2026. The bank expects the Monetary Authority of Singapore to potentially tighten monetary policy further in its upcoming decision, despite acknowledging the decision will be closely contested.
