Singapore Inflation: 2026 Price Surge Ahead?

The Lion City has just closed the chapter on a year of remarkably subdued price growth, but the honeymoon period for consumers and investors alike may be nearing its end. Official data released on Friday confirms that Singapore’s core inflation averaged a mere 0.7% throughout 2025, a dramatic deceleration from the 2.8% recorded in 2024. For global investors tracking ASEAN markets, this cooling period provided a much-needed buffer against the volatility seen in other developed economies. However, as the final figures for December settle at 1.2% year-on-year, the focus has shifted from the victory of the past to the brewing inflationary headwinds of 2026.

A Record-Low Year for Prices
The drop in average headline inflation from 2.4% in 2024 to 0.9% in 2025 suggests that the aggressive monetary policy tightening of previous cycles has effectively permeated the economy. Core inflation, which the Monetary Authority of Singapore (MAS) utilises as its primary gauge by stripping out volatile private transport and accommodation costs, remained steady at 1.2% in December—matching the November print.

On a month-on-month basis, core prices rose by 0.4%, signalling that the downward momentum has hit a floor. For the international community, where US dollar-denominated assets often dictate the pace of regional flows, Singapore’s ability to anchor its domestic price index so effectively in 2025 has been a standout performance in the Asia-Pacific region.

Sectoral Splits and Stable Core
This stability at the close of 2025 was underpinned by food and services inflation, which showed little movement. Services inflation stood at 1.9%, where a smaller fall in airfares was largely offset by a slower pace of increase in healthcare costs and a decline in holiday expenses. Food inflation remained anchored at 1.2%, as the cost of food services increased at a pace consistent with previous months.

However, the quiet surface of these numbers masks a subtle shift in private transport. This sector saw inflation pick up from 3.5% to 3.7% as the decline in petrol prices began to lose momentum. Accommodation prices also rose at a steady pace, reflecting a rental market that remains resilient despite increased housing supply. For investors in Singaporean REITs and the broader property sector, this indicates that the "accommodation" component of the Consumer Price Index (CPI) is likely to remain a sticky floor for headline inflation moving forward.

2026: The Return of Inflationary Heat
While the 2025 figures were celebratory, the joint outlook from MAS and the Ministry of Trade and Industry (MTI) is notably more cautious. The consensus is that the era of rapidly declining imported costs is coming to an end. "Singapore’s imported costs should continue to decline, albeit at a slower pace, over the course of this year," authorities noted. This suggests that the disinflationary tailwind from external global supply chains is nearly exhausted.

Of greater concern for corporate margins and equity valuations is the domestic labour market. As productivity growth begins to normalise, unit labour costs are expected to climb. This internal pressure, combined with a steady appetite for private consumption, has led authorities to project that "MAS core inflation and CPI-All Items inflation are projected to rise in 2026 from their low rates last year." For businesses operating in the Republic, this signals a potential squeeze: rising wage bills on one side and a less accommodative pricing environment on the other. As we await the upcoming monetary policy statement on 29 January, the priority for capital allocation remains defensive, prioritising sectors with the pricing power to withstand this anticipated rise in domestic costs.