Lower food and transport costs push inflation down; outlook remains cautiously optimistic for 2025

Singapore’s core inflation dropped to 0.6% in May 2025, signaling continued relief for households as food and transport costs ease. The Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) credit the dip to stabilizing global prices and effective domestic policies.

Core Inflation Returns to 0.6%

In May 2025, Singapore’s core inflation rate fell to 0.6% year-on-year, a slight decline from April’s 0.7%, according to data released on June 23 by MAS and MTI. This measure excludes accommodation and private transport costs and reflects the real cost pressures faced by households.

Headline inflation, which includes all items, also dropped from 0.9% in April to 0.8% in May, aligning with private-sector forecasts. On a month-on-month basis, core inflation was flat, while headline inflation rose by 0.7%.

Key Drivers: Food, Energy, Transport

• Food inflation declined to 1.1% from 1.4% due to moderating prices of non-cooked food.
• Electricity and gas inflation fell further to -3.7%, driven by a steeper drop in electricity costs.
• Private transport inflation eased to 1.1% as car price hikes slowed.
• Retail and other goods inflation saw a smaller decline at -1.0%, influenced by rising appliance costs and a smaller drop in personal effects.
• Services and accommodation inflation held steady at 1.1%, as rising health and transport costs offset cheaper holiday expenses.

External Environment Remains Uncertain

MAS and MTI noted that while global crude oil prices have increased recently, they remain close to the 2024 average. Food commodity prices are also expected to stay stable. Ongoing trade tensions and energy cost spikes could create inflationary pressure, but weaker global demand is likely to offset these risks.

Domestically, unit labour costs are projected to rise gradually, in line with moderating wage growth and productivity gains. However, enhanced government subsidies—especially in healthcare, pre-school, and public transport—will help contain service-sector inflation.

Stable Inflation Outlook

Authorities maintained their forecast that both core and overall inflation would average between 0.5% and 1.5% for 2025. Still, they cautioned that inflation risks remain due to external uncertainties.

This measured outlook balances optimism with preparedness, reflecting both economic resilience and policy flexibility.

For both Singaporeans and Indonesians observing the region’s economic direction, Singapore’s May inflation data signals cautious stability. Easing food and energy prices, combined with government subsidies, offer some breathing room. However, rising labour costs and geopolitical tensions mean the battle against inflation is far from over.

Sources: CNA (2025) , The Business Times (2025)

Keywords: Singapore Inflation, Core Inflation May, MAS MTI Report, Food Price Decline, Private Transport Cost, Energy Prices