Singapore’s core inflation experienced a modest rebound in September, increasing by 0.3% month-on-month, according to a report by UOB Global Economics and Markets Research. This rise marks an improvement from August’s 0.1% increase and suggests early signs of reflation, although it remains too early to draw definitive conclusions. Year-on-year, core inflation edged up to 0.4%, exceeding both Bloomberg’s consensus and UOB’s forecast of 0.2%.
The headline Consumer Price Index (CPI) also saw a stronger rise of 0.4% month-on-month and 0.7% year-on-year, driven primarily by a surge in private transport costs. This increase was attributed to higher car prices following adjustments to vehicle electrification schemes, as noted in a Land Transport Authority press release.
Several components of the core CPI basket, including clothing, health, and transport services, posted notable month-on-month increases. This broad-based rise in prices led to a jump in sequential inflation pervasiveness to approximately 41% in September, up from 33% in August.
UOB has adjusted its core inflation forecast for 2025 to 0.6% and for 2026 to 1.3%, factoring in rising costs associated with the green transition and other administered measures. These include a Sustainable Aviation Fuel levy and a hike in electricity tariffs due to increased carbon taxes.
The Monetary Authority of Singapore (MAS) is expected to maintain its current policy settings, allowing for flexibility in response to growth and inflation risks. The MAS has assessed the recent disinflation as largely supply-driven, with minimal demand contributions, and projects the output gap to remain around 0% in 2026.
