Core inflation in Singapore fell to 2.1% year-on-year in October, marking its lowest point since December 2021, according to data released by the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) on Monday (Nov 25).

The decline from 2.8% in September was attributed to lower inflation across services, electricity and gas, and retail and other goods. Headline inflation also eased to 1.4% in October from 2% in September, driven by slower accommodation inflation and a steeper decline in private transport costs.

On a month-on-month basis, core inflation saw a decrease of 0.3%. A Reuters poll had anticipated core inflation to be at 2.5% in October. Core inflation excludes accommodation and private transport.

MAS and MTI noted:
"Although global energy prices have been volatile in recent weeks, they have on average remained below the levels a year ago. Meanwhile, in tandem with easing global inflation and the gradually strengthening trade-weighted S$ exchange rate, Singapore's imported manufactured goods prices have also continued to be on a broad decline."

In specific sectors, services inflation dropped significantly to 2.3% in October from 3.3% in September, attributed to smaller cost increases for holiday expenses and healthcare services. Electricity and gas inflation moderated to 2.5%, down from 6.3% the previous month, as prices rose more slowly. Retail and other goods inflation also declined, falling to 0.1% from 0.8%, due to steeper price drops in clothing, footwear, and health products.

Accommodation inflation edged down to 2.5% from 2.7% due to a smaller rise in rents, while private transport costs fell further to -2.5%, mainly reflecting a larger drop in car prices. Food inflation remained steady at 2.6%, with similar price increases in both non-cooked food and food services over September and October.

Looking ahead, MAS and MTI projected that core inflation would hover around 2% for the rest of 2024, averaging between 2.5% and 3% for the year. It is expected to moderate further to 1.5% to 2.5% in 2025.

Accommodation inflation is anticipated to decline next year, partially offsetting a potential rise in private transport inflation amid strong demand for cars. Overall inflation is forecasted to reach around 2.5% for 2024 and average between 1.5% and 2.5% in 2025.

MAS and MTI cautioned that inflation risks remain balanced:
"Domestically, stronger-than-expected labour market conditions could lead to a slower easing in unit labour cost growth. An intensification of geopolitical tensions may lead to higher commodity prices and add to imported costs. Conversely, a significant downturn in the global economy could induce a greater easing of cost and price pressures, causing domestic inflation to come in lower than expected."