^{Photo: Bloomberg.com}

Singapore’s inflation momentum picks up again

Singapore’s inflation rate rose for a second consecutive month, signalling a renewed upward pressure on prices after hitting a four year low just weeks earlier. October’s headline inflation reached 1.2 percent year on year, surpassing both the 0.9 percent consensus forecast and the 0.7 percent increase seen in September. This marks the highest level since August 2024, reflecting a sharper rebound in price growth than many economists anticipated.

Core inflation, which excludes private transport and accommodation and is closely watched by policymakers, also climbed to 1.2 percent. This was nearly double September’s reading of 0.4 percent and significantly higher than the 0.7 percent expectation surveyed by Reuters. On a month to month basis, overall consumer prices were unchanged, while core inflation increased 0.5 percent, underscoring persistent domestic price pressures.

Transport, healthcare and everyday living costs drive the increase

A significant portion of October’s inflation spike came from transport costs, which jumped 3.4 percent. Rising car ownership costs and higher public transport fares were major contributors. Healthcare prices also surged by 4 percent, one of the steepest increases in the consumer basket, reflecting higher medical service costs and rising healthcare demand.

Core inflation pressures were further boosted by higher costs in services, food and retail, while declines in electricity and gas prices moderated but did not fully offset broader price gains. The Ministry of Trade and Industry noted that these categories have become more influential as households grapple with sustained increases in daily expenses.

Economic growth accelerates but future demand faces risks

The inflation update arrived alongside an upward revision to Singapore’s full year growth outlook. The Ministry of Trade and Industry raised its 2025 GDP growth forecast to around 4 percent, a significant jump from the earlier projection of 1.5 to 2.5 percent. Stronger than expected global demand and robust domestic performance helped the economy expand 4.2 percent in the third quarter compared with a year earlier. This follows the second quarter’s 4.7 percent gain, marking one of the strongest stretches of growth in recent years.

Despite the positive momentum, policymakers warned that 2026 could bring a sharper slowdown. Rising U.S. tariffs are expected to weigh on international trade flows, with Singapore particularly exposed due to its heavy dependence on external demand. The country maintains a trade to GDP ratio exceeding 320 percent, one of the highest in the world, making it vulnerable to global economic shifts.

Singapore’s exports to the U.S. face a baseline tariff of 10 percent, even though the two countries have maintained a free trade agreement since 2004 and Singapore runs a trade deficit with the U.S. These tariffs pose an increasing risk to export driven industries.

Exports show mixed performance as electronics and gold shipments rebound

Singapore’s non oil domestic exports have fluctuated sharply throughout the year. In the third quarter, NODX fell 3.3 percent year on year due to weakness in pharmaceuticals and petrochemicals, two key export pillars. However, October brought a strong turnaround, with NODX surging 22.2 percent compared with the previous year. The rebound was powered by strong demand for non monetary gold and renewed momentum in electronic exports, signaling renewed appetite from global markets.

This export volatility underscores Singapore’s sensitive position in global supply chains, where external shocks can shift performance quickly across quarters.

Outlook and policy stance remain cautious

The Monetary Authority of Singapore has maintained a steady policy stance, leaving its monetary settings unchanged during its October meeting. The central bank noted that economic conditions have been more resilient than initially forecast but reiterated a cautious outlook for inflation and growth.

MAS expects inflation to ease to between 0.5 percent and 1 percent in 2025, though global energy prices, geopolitical tensions and changes in trade dynamics could influence the trajectory.

For now, October’s inflation surge signals that cost pressures remain persistent across key consumer categories. As Singapore continues to balance strong economic momentum with rising price levels and external risks, both policymakers and consumers will be closely watching early 2025 data to determine whether this uptick becomes a longer term trend or a temporary spike.