Singapore experiences slowest inflation growth in nearly four years

In January 2025, Singapore recorded its lowest inflation growth since February 2021, with an increase of 1.2% year on year, down from a revised 1.5% in December 2024. This economic data followed the announcement of Singapore's 2025 budget on February 18, which focused on supporting households and businesses facing rising cost of living pressures. Prime Minister Lawrence Wong acknowledged that despite expectations for further alleviation of inflation, high prices remain a concern as consumers adapt to these changes. The decline in inflation was surprising as it missed economists’ expectations who had predicted a 2.15% rise. Core inflation, which excludes private transport and accommodation costs, showed an even more notable slowdown, rising only 0.8% on a year-on-year basis, a decrease from 1.7% in December and lower than the expected growth of 1.5%. Singapore's Ministry of Trade and Industry attributed this deceleration to lower inflation across all core Consumer Price Index (CPI) categories. On top of this, Singapore's imported inflation remains moderate, and the Ministry cautioned that while trade frictions could lead to inflationary pressures in other economies, the impact on Singapore's import prices is likely to be mitigated by a decrease in global demand. The Monetary Authority of Singapore (MAS) relaxed its monetary policy for the first time since 2020, signaling confidence in a faster-than-expected decline in inflation. The MAS forecasts that headline inflation will best average between 1.5% and 2.5% in 2025, a slight decline compared to 2.4% anticipated for 2024. Moreover, the MAS has also adjusted its projections for core inflation, forecasting a range of 1% to 2% for the same period. Under these economic conditions, the government is poised to provide more support to citizens and businesses while they navigate continuing inflation pressures.