Singapore: Inflation declines in January
Latest reading: Inflation dropped to 1.2% in January from December’s 1.5%, marking the lowest inflation rate since October 2024 and undershooting market expectations. The decline was influenced by a recent change in methodology; Singapore’s statistical office shifted the base year with which inflation is calculated from 2019 to 2024. Following this change, the weight for accommodation and healthcare in the consumer basket has increased significantly, while those for food, education and private transport have fallen. Looking at the details of the release, January’s decline was due to softer price pressures for food. Moreover, housing and utilities prices fell, in line with the announced 4.3% drop in electricity tariffs for Q1 2025. On the flip side, price pressures for transportation strengthened.
Accordingly, the trend pointed down slightly, with annual average inflation declining to 2.2% in January (December: 2.4%). Meanwhile, core inflation fell to 0.8% in January from December’s 1.7%.
Lastly, consumer prices dropped 0.75% from the previous month in January, swinging from the 0.27% rise recorded in December. January’s result marked the weakest reading since April 2020.
Panelist insight: Commenting on the outlook, Nomura’s Euben Paracuelles and Charnon Boonnuch stated:
“Taking into account the January outturn and the new weights in the new CPI series, we lower our full-year 2025 core inflation forecast. […] Our new forecasts take into account stable imported price pressures based on the average inflation in Singapore’s top ten trading partners. We expect the decline in holiday expenses to be short-lived, with a likely strong bounce-back in coming months especially after the CNY holiday distortions. However, we expect food inflation to moderate further after the temporary CNY boosts dissipate.”