Singapore's Inflation Rate Rises Amid Economic Growth

Singapore's inflation rate has increased for the second consecutive month, with the consumer price index (CPI) rising by 1.2% year-on-year in October 2025. This marks the highest inflation rate since August 2024, surpassing the 0.9% average forecast by economists surveyed by Reuters and the 0.7% increase recorded in September. Core inflation, which excludes accommodation and private transport costs, also rose to 1.2%, up from 0.4% in September and exceeding the expected 0.7%. Month-on-month, the CPI remained flat, while core inflation saw a slight increase of 0.5%.

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The rise in inflation has been attributed to a notable 3.4% increase in transport prices and a significant 4% rise in health costs. The Ministry of Trade and Industry indicated that the increase in core inflation was driven by higher prices in services, food, and retail sectors, alongside a milder decline in electricity and gas prices.

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In conjunction with rising inflation, Singapore's economy has shown robust growth, with the Ministry of Trade and Industry upgrading its economic growth forecast for 2025 to 4%, up from a previous estimate of 1.5%-2.5%. The economy expanded by 4.2% in the third quarter compared to the previous year, following a 4.7% growth in the second quarter. However, the ministry cautioned that growth may cool in 2026 due to the impact of U.S. tariffs on global demand.

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Singapore's economy is heavily reliant on trade, with a trade-to-GDP ratio exceeding 320% in 2024. Despite a 3.3% decline in non-oil domestic exports (NODX) year-on-year in the third quarter, October saw a significant rebound, with NODX surging by 22.2%, driven by exports of non-monetary gold and electronic products.

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The Monetary Authority of Singapore (MAS) has forecasted inflation to be between 0.5% and 1% for 2025. In its October meeting, the MAS maintained its monetary policy, citing stronger-than-expected economic growth. Chua Hak Bin, regional co-head for macro research at Maybank, anticipates that both core and headline inflation will exceed 1% in 2026, influenced by factors such as an increase in public transport fares, a higher carbon tax, and a new sustainable fuel levy on flight tickets. He noted that the rise in consumer prices will be propelled by stronger economic growth, decreasing interest rates, and increasing credit growth.

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Market analyst Zavier Wong from eToro remarked that while the inflation figures are "not alarming," they warrant attention. He emphasized that the headline inflation is driven by specific categories like health and private transport, indicating a lack of broad-based inflationary pressure. Wong noted that domestic demand remains cautious, with consumers spending but lacking the confidence to drive prices higher.

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• “Chua Hak Bin, regional co-head for macro research at Maybank, told CNBC that both core and headline inflation will likely come in at above 1% in 2026, compared with under 1% in 2025.” — Chua Hak Bin, Regional Co-head for Macro Research at Maybank

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