CGS International
June 23, 2025

Singapore CPI Hits Record Lows in 2025: Core Inflation Eases but Geopolitical Risks Loom

Overview: Inflation Softens Despite Global Uncertainty

Singapore’s inflationary pressures have eased significantly, with the latest data showing both core and headline Consumer Price Index (CPI) measures at their lowest levels since 2021. In May 2025, core inflation dropped to 0.6% year-on-year (yoy), down from 0.7% in April, while headline inflation slipped to 0.8% yoy from 0.9% previously. These results were in line with market expectations, signaling a period of subdued price growth across key sectors.

Key Highlights from Singapore’s Inflation Report

• Core inflation fell to 0.6% yoy in May 2025, reversing the previous month’s uptick.
• Headline inflation hit 0.8% yoy, reflecting broader easing across consumer prices.
• Private transport inflation continued its slide, largely due to declining Certificate of Entitlement (COE) premiums.
• Electricity and gas inflation moderated further, driven by a sharper drop in electricity prices.
• The year-to-date CPI stands at 0.9% yoy, closely tracking the Monetary Authority of Singapore’s (MAS) 2025 forecast range of 0.5% to 1.5%.

Dissecting the Drivers: What’s Behind the Numbers?

Food and Energy Costs See Slower Gains

The deceleration in core inflation was largely attributed to more moderate increases in food prices, particularly for non-cooked food. Headline inflation was also subdued due to softer price gains in both food and private transport. Electricity and gas prices posted notable declines as electricity rates fell sharply, easing cost pressures for households and businesses alike.

Private Transport: COE Premiums Lose Steam, But Remain Elevated

Private transport inflation eased for the third consecutive month, reaching just 1.1% yoy in May 2025, down from 1.3% in April. The moderation stems primarily from smaller increases in car prices, as COE premiums declined across most categories in the second May bidding exercise:

• Category A premiums: Down 0.5% to S\$102,501
• Category B premiums: Down 2.4% to S\$116,988

This trend likely reflects a combination of buyer fatigue after repeated price hikes, expectations of a larger COE quota, and a temporary demand pause ahead of new car launches. Despite the downward movement, COE premiums remain historically high and are expected to stay elevated in the near term, especially with dealerships rolling out attractive packages for new models. Consequently, private transport inflation is anticipated to remain sticky unless further, sustained declines in COE premiums materialize and demand weakens meaningfully.

Geopolitical Tensions: The Wildcard for Inflation

While domestic price trends remain subdued, external factors cast a shadow on the inflation outlook. The softening trend seen earlier in the year coincides with subdued global demand amid persistent uncertainties. However, escalating geopolitical tensions, particularly in the Middle East, could introduce upside risks to the inflation trajectory. The MAS notes that global crude oil prices are broadly aligned with 2024 averages and food commodity prices are expected to stay stable. Despite potential volatility, overall inflation pressures are projected to remain contained, with the 2025 CPI forecast held steady at 1.5% yoy.

Detailed Breakdown: Singapore’s CPI Components

Regional Macro Forecasts: Singapore in Comparative Perspective

Import Prices and Producer Price Index Trends

Import prices and the Producer Price Index (PPI) have moderated in tandem with consumer price trends, underscoring the broad-based nature of disinflation across Singapore’s economy. These measures provide additional confirmation that upstream input costs are not exerting undue pressure on consumer prices at present.

Policy and Market Implications: What’s Next for Singapore?

• Singapore’s monetary policy remains centered on the exchange rate rather than interest rates, providing flexibility in responding to external shocks.
• International reserves are robust, projected to reach US\$380 billion in 2025.
• The city-state’s fiscal and current account positions remain strong, supporting economic stability even as inflation moderates.

For investors and market watchers, the key takeaway is that while Singapore’s inflation is currently subdued, the outlook is highly sensitive to external shocks, especially from the energy and food markets. The MAS and policymakers remain vigilant, but barring major geopolitical escalations, the inflation trajectory is expected to remain contained through 2025.

Conclusion: Singapore’s Inflation Trough Offers Both Relief and Caution

With core and headline CPI at multi-year lows, Singapore stands out as a regional example of effective inflation management in a turbulent global environment. However, elevated private transport costs and the ever-present threat of geopolitical disruptions mean that vigilance is warranted. The city-state’s resilience, underpinned by strong policy frameworks and robust external balances, positions it well for a period of low and stable inflation—provided global risks remain in check.