Average core inflation in Singapore forecasted at 1.5-1.25% in 2025

Core inflation is expected to slow in Q4 2024, ending the year around 2%, with a 2024 average of 2.5%–3%.

The Monetary Authority of Singapore (MAS) said today (14 October 2024) that ⁠core inflation momentum is expected to stay contained in Q4 2024, implying a further slowing in its y-o-y rate over the next few months.

In that vein, core inflation is likely to settle at around 2% at year-end,, and average between 2.5%–3% for 2024 as a whole, down from 4.2% in 2023.

The forecast average for 2025 stands at 1.5%–2.5%, MAS added, reflecting moderate inflationary pressures, supported by stable imported costs and easing global financial conditions.

On the domestic front, unit labour costs are projected to rise more gradually, alongside moderating nominal wage growth as well as a recovery in productivity. 

Core inflation and economic performance over the quarters

In recent months, core inflation has eased, with MAS core inflation dropping to 2.6% year-on-year in July-August, down from 3% in Q2. This decline was driven by slower price increases across a range of goods and services, including food and household durables. Excluding the impact of the GST hike, core inflation during this period was estimated to be below 2%.

CPI-All Items inflation has also moderated, falling to 2.3% in July-August, with a year-end forecast of 2.5% — a drop from 4.8% last year.

As a whole, MAS noted that Singapore's economy has remained resilient, with gross domestic product (GDP) growth in Q3 accelerating to 2.1%, boosted by strong performance in the electronics sector. For 2024, MAS expects GDP growth to reach the upper end of the 2%–3% forecast range, with continued steady growth in 2025. However, external risks, including geopolitical tensions and trade conflicts, could pose challenges to this outlook.

Looking at 2025, inflationary risks remain balanced. Core inflation is expected to remain moderate, with stable imported costs driven by lower oil prices and favourable food supply conditions. However, some upward pressure may come from rising private transport costs, even as housing demand cools, leading to a projected CPI-All Items inflation average of 1.5%–2.5%.

READ MORE: Singapore's MTI revises 2024 GDP forecast to "2% to 3%"

Lead image / MAS