FX.co ★ Singapore Inflation Eases To 2.0%, Lowest Since March 2021

Singapore's inflation rate continued its downward trajectory in September, reaching its lowest point in three-and-a-half years, according to data released by the Monetary Authority of Singapore and the Ministry of Trade and Industry. This decline was primarily driven by a more pronounced decrease in private transport costs.

Year-on-year, the consumer price index increased by 2.0% in September, a slight deceleration from the 2.2% increase observed in August. This marks the lowest inflation rate since March 2021, when the rate was 1.3%.

The decrease is largely attributable to falling private transport prices, which more than offset the uptick in core inflation. Core inflation saw a slight rise, registering at 2.8% in September, compared to 2.7% in August, due to a resurgence in retail and other goods inflation.

Private transport costs plummeted by 2.4% year-on-year, driven by a notable decrease in car prices and reduced petrol costs. Accommodation inflation eased to 2.7% from 2.9%, while food inflation ticked down to 2.6% from 2.7%. Meanwhile, service inflation held steady at 3.3%.

The Monetary Authority of Singapore projects that core inflation will continue its gradual decline, reaching approximately 2% by the end of 2024. CPI-All Items inflation is anticipated to average around 2.5% for 2024 and settle between 1.5-2.5% in 2025.

The MAS also indicated that the risks to the inflation outlook remain balanced. Domestically, an unexpectedly robust labor market could slow the reduction in unit labor cost growth. On the global stage, escalating geopolitical tensions may drive up imported costs, while a major downturn in the global economy could lead to a more significant easing of cost and price pressures.