SINGAPORE – A measure of inflation that represents key Singapore household expenses is forecast to decline to around 2 per cent by the end of this year – the lowest level since November 2021 – and ease further into 2025, said the Monetary Authority of Singapore (MAS).
The central bank’s estimate is for core inflation – which excludes private accommodation and transport costs to better represent Singapore household expenses – and comes after two months of higher-than-expected outcomes.
After falling to 2.5 per cent in July – the lowest level in more than two years – core inflation came at 2.7 per cent in August and 2.8 per cent in September as retail and services inflation picked up pace.
However, MAS said in its biannual Macroeconomic Review report on Oct 28 that core inflation has come off significantly from the 5.5 per cent peak in January 2023 and despite the volatility in monthly data the declining trend should remain generally intact.
For the year as a whole, MAS projected core inflation will average 2.5 per cent to 3 per cent in 2024, down from 4.2 per cent in 2023. Meanwhile, all-items inflation is expected to come in around 2.5 per cent on average this year, compared to 4.8 per cent the year before.
MAS said the pent-up leisure travel demand has dissipated, limiting the extent to which travel-related services prices can pick up. Meanwhile, enhanced public healthcare subsidies that came into effect from October will also contribute to a step-down in essential services inflation in the remaining months of the year.
“In addition, crude oil prices which were lower in July to September 2024 compared to the same period a year ago, will reduce electricity and gas inflation in the fourth quarter,” MAS said.
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