Inflation rises in January from December

Latest reading: Consumer prices were up 1.4% in annual terms in January, following a 1.2% increase in the previous month. January's reading was the strongest since December 2024. Relative to the previous month's figures, price pressures were higher for housing and utilities in January (+1.7% on a year-on-year basis vs +0.2% in December). In contrast, price pressures reduced for transport in January (+2.4% vs +3.6% in December). Finally, the variation in food prices was the same as in the prior month (+1.2% in January and December). Meanwhile, core consumer prices increased 1.0% on a year-on-year basis in January, following a 1.2% increase in the previous month, which was against expectations of a pickup. Lastly, consumer prices were down 0.51% in January in month-on-month terms, following a 0.27% rise in the prior month.

Panelist insight: Commenting on the outlook, Vicky Chen and Manthan Shingala from Nomura stated: “Despite the lower-than-expected outturn in January, we maintain our 2026 core inflation forecast of 2.1%, above the latest MAS forecast of 1–2%, which was raised from 0.5–1.5% recently. The reduction in education inflation poses downside risks to our forecast, but this is offset by the upside risk from higher oil prices […]. In addition, measures announced in the FY26 budget could exacerbate price pressures, e.g. the tobacco tax hike from February and the tightening of foreign labor policy, which could raise labor costs.”

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