CGS International
Date of Report: September 23, 2025
Singapore Inflation Outlook 2025: CPI Slows, Risks Balanced as Services Cool and Transport Costs Rise
Overview: Singapore’s Inflation Eases Amid Mixed Sector Trends
Singapore’s inflation picture continued to soften in August 2025, with both core and headline consumer price indices (CPI) surprising on the downside. Core inflation moderated to 0.3% year-on-year (yoy), while headline inflation edged down to 0.5% yoy, both below consensus forecasts. The deceleration was largely attributed to subdued services inflation and a moderation in accommodation costs, even as private transport costs ticked higher due to elevated Certificate of Entitlement (COE) premiums.
CGS International maintains its 2025 CPI forecast at 1.0% yoy, anticipating that weaker global demand will counterbalance geopolitical risk pressures, keeping inflation contained. The Monetary Authority of Singapore (MAS) also projects an average CPI range of 0.5–1.5% for the year.
Core and Headline CPI: Sector Analysis and Detailed Breakdown
August’s moderation in core CPI was driven by a significant decline in services-related components, reflecting softer demand and easing costs in several categories. However, rising private transport inflation, fuelled by higher COE premiums, presented an upward offset.
| CPI Component |
Weight (%) |
Jun 25
(% yoy) |
Jul 25
(% yoy) |
Aug 25
(% yoy) |
8M25
(% yoy) |
Jun 25
(% mom, sa) |
Jul 25
(% mom, sa) |
Aug 25
(% mom, sa) |
| Consumer Price Index (CPI) |
100.0 |
0.8 |
0.6 |
0.5 |
0.8 |
-0.1 |
0.0 |
0.0 |
| MAS Core Inflation |
– |
0.6 |
0.5 |
0.3 |
0.6 |
– |
– |
– |
| Food |
20.4 |
1.0 |
1.1 |
1.1 |
1.2 |
0.1 |
0.3 |
0.2 |
| Clothing & Footwear |
1.7 |
2.2 |
-2.3 |
0.2 |
-1.2 |
3.5 |
-2.4 |
0.4 |
| Housing & Utilities |
29.4 |
0.9 |
0.3 |
0.3 |
0.9 |
0.0 |
0.0 |
0.0 |
| Household Durables & Services |
5.5 |
-0.4 |
-0.5 |
-0.9 |
-0.5 |
-0.4 |
0.0 |
-0.2 |
| Health Care |
10.1 |
2.8 |
2.4 |
2.3 |
2.2 |
-0.1 |
-0.3 |
0.1 |
| Transport |
13.1 |
2.0 |
2.1 |
2.3 |
2.1 |
-0.2 |
0.2 |
0.2 |
| Communication |
3.8 |
-2.4 |
-2.6 |
-2.1 |
-1.7 |
-1.1 |
-0.1 |
0.3 |
| Recreation & Culture |
6.0 |
-2.6 |
-1.2 |
-3.0 |
-1.6 |
-0.5 |
1.1 |
-1.2 |
| Education |
5.8 |
0.5 |
0.7 |
0.8 |
0.5 |
0.2 |
0.3 |
0.2 |
| Miscellaneous Goods & Services |
4.4 |
0.0 |
-0.4 |
-0.8 |
-0.3 |
0.2 |
-0.2 |
-0.1 |
| CPI Less Imputed Rentals on OOA |
78.6 |
0.8 |
0.7 |
0.6 |
0.8 |
-0.1 |
-0.1 |
0.1 |
| CPI Less Accommodation |
73.4 |
0.7 |
0.7 |
0.6 |
0.7 |
-0.1 |
-0.1 |
0.2 |
Key Sector Dynamics: What’s Driving the Numbers?
- Services: Inflation in the services sector slid to 0.4% yoy in August (from 0.7% in July), with notable declines in recreation and culture (-3.0% yoy), driven by reduced discretionary spending, and airfares (-4.6% yoy), reflecting increased flight capacity, strong competition, and lower global fuel prices.
- Health Care: Inpatient services prices continued to drop (-1.5% yoy), likely due to easing input costs and weaker foreign demand for medical tourism.
- Transport: Private transport inflation rose to 2.4% yoy, up from 2.1% in July, as petrol prices dropped less sharply and COE premiums for Category A and B cars soared to S\$104,524 and S\$124,400, respectively, due to increased competition and more car models entering the market.
- Accommodation: Accommodation inflation eased to 0.4% (from 0.5%), as housing rents increased at a slower pace.
- Food: Food inflation remained steady at 1.1% yoy.
- Recreation & Culture: The sector saw a sharper decline, with inflation falling to -3.0% yoy (from -1.2% in July), highlighting continued softness in discretionary spending.
Inflation Path and Risk Outlook: Balanced Risks Ahead
The MAS expects imported inflation to remain moderate in the near term, with food commodity prices staying contained. While global trade tensions could introduce upside risks, these are likely to be offset by muted global demand — a disinflationary force for Singapore. Domestically, government subsidies for essential services are expected to continue capping price increases.
Key risks on the horizon:
- Renewed geopolitical shocks could drive up energy and shipping costs.
- Softer global and local growth could further suppress core inflation.
CGS International maintains its 2025 headline inflation forecast at 1.0% yoy, consistent with the MAS’s average range of 0.5–1.5%. This outlook reflects a careful balance between potential global shocks and ongoing domestic disinflationary trends.
Singapore vs Regional Peers: Macro Forecast Table
| Metric |
2018 |
2019 |
2020 |
2021 |
2022 |
2023 |
2024 |
2025F |
2026F |
| Singapore Real GDP (% yoy) |
3.5 |
1.3 |
-3.9 |
9.7 |
3.8 |
2.2 |
4.4 |
1.6 |
2.5 |
| Singapore Headline Inflation (avg, % yoy) |
0.4 |
0.6 |
-0.2 |
2.3 |
6.1 |
4.8 |
2.4 |
1.0 |
1.7 |
| Singapore Headline Inflation (end-period, % yoy) |
0.5 |
0.8 |
0.0 |
4.0 |
6.5 |
3.7 |
1.8 |
0.9 |
1.9 |
| Singapore Unemployment Rate (end-period, %) |
1.9 |
2.0 |
2.8 |
2.1 |
1.8 |
1.8 |
1.7 |
2.0 |
2.1 |
| Singapore Fiscal Balance (% of GDP) |
0.7 |
0.2 |
-10.8 |
0.3 |
0.3 |
-0.5 |
0.9 |
0.9 |
0.2 |
| Singapore Current Account Balance (% of GDP) |
15.2 |
14.5 |
16.6 |
19.8 |
18.0 |
17.7 |
17.5 |
16.4 |
14.2 |
| Singapore International Reserves (US\$ bn) |
287.7 |
279.5 |
362.3 |
417.9 |
287.5 |
347.6 |
371.4 |
380.0 |
390.0 |
| Singapore Policy Rate (end-period, %) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
| Singapore Dollar (end-period, per US\$) |
1.36 |
1.35 |
1.32 |
1.35 |
1.34 |
1.32 |
1.36 |
1.30 |
1.31 |
Conclusion: Modest Inflation Expected, Vigilance Required
Singapore’s inflation outlook for 2025 remains modest, with both global and domestic trends acting to keep price pressures contained. While certain sectors like private transport face upward cost pressures, broad-based disinflation in services, continued government subsidies, and subdued global demand are likely to sustain a low inflation environment. Investors and market watchers should monitor potential geopolitical shocks and shifts in global demand, but the current risk balance points to a steady inflation trajectory for the year.
Report prepared by:
Mohamed Afham Zulghafir ([email protected])
Nazmi Idrus ([email protected])
