Overview: Core Inflation Eases Across 2025
Singapore’s core inflation averaged 0.7% for the year 2025, a notable slowdown from 2.8% in 2024. The December reading was 1.2%, unchanged from November 2025, suggesting a continued deceleration in underlying price pressures as the economy adapts to shifting demand and supply dynamics.
What This Means for Consumers and Policy
Lower core inflation generally signals that underlying price increases, excluding volatile energy and accommodation costs, are moderated. For households, this can translate to slower growth in essential living costs such as services, education, and healthcare. Policymakers, including the Monetary Authority of Singapore (MAS) and the government, monitor these trends to calibrate measures that balance price stability with growth and employment goals.
Drivers Behind the Decline
Analysts point to softer domestic demand, cooling services inflation, and a stabilizing housing market as contributing factors. The 2025 dip also reflects a broader trend seen in many advanced economies, where supply chain normalization and competitive pricing pressures ease the pace of price rises in non-discretionary sectors.
Sectoral Insights
While core inflation is a broad gauge, its components tell a story about the economy’s texture. Services inflation, including transportation, education, and healthcare, influences the overall number. If these components rise more slowly, the annual average can fall even if other areas show modest upticks. Analysts will scrutinize these subcategories in the next releases to gauge where price pressures are most persistent.
Outlook: What to Watch in 2026
Looking ahead, the trajectory of core inflation will hinge on external factors such as global energy prices and domestic factors like wages, productivity, and consumer demand. If supply constraints ease further and consumption remains cautious, 2026 could see continued moderation, helping maintain affordability for households while supporting steady economic growth.
Impact on financial markets and borrowing
Inflation trends influence expectations for interest rates and borrowing costs. A slower core inflation pace can reduce the urgency for aggressive monetary tightening, potentially stabilizing borrowing costs for mortgages, business loans, and consumer credit. Investors will closely watch the figures for signals about MAS policy stance in the near term.
Bottom Line
The 2025 core inflation rate of 0.7% marks a shift toward cooler price growth in Singapore, with December’s 1.2% reading hinting at a period of relative stability. While this supports consumer purchasing power, policymakers will maintain vigilance to ensure inflation remains anchored as global and domestic conditions evolve.
