Singapore experienced a significant rise in core inflation in 2023, marking a notable shift in the country’s economic landscape.
Core Inflation Increase
In December 2023, Singapore’s core inflation, which excludes accommodation and private transport costs, edged up to 3.3% year-on-year. This was a slight increase from the 3.2% recorded in November. The rise in core inflation was primarily driven by higher services inflation.
Annual Inflation Trends
Throughout 2023, Singapore saw fluctuations in core inflation rates. The year started with a 14-year high of 5.5% in January and February before trending downwards to 3% in September, the lowest since March 2022. Overall, for the entire year, the average core inflation was 4.2%, which is higher than the 4.1% average in 2022.
Headline Inflation
The headline consumer price index, or overall inflation, stood at 3.7% in December, a slight increase from 3.6% in November. This uptick was attributed to a faster rise in private transport costs and services inflation. The overall inflation for the year averaged 4.8%, showing a decrease from the 6.1% recorded in the previous year.
Influencing Factors
Several factors contributed to the inflation rates in 2023, including the increase in the Goods and Services Tax (GST) rate to 8%. Specific sectors like services, private transport, retail, electricity, gas, and food all experienced varying levels of inflation throughout the year.
2024 Outlook
Looking ahead to 2024, core inflation in Singapore is projected to average between 2.5% and 3.5%. This forecast includes the impact of the GST rate increase to 9% and other changes like increases in bus and train fares, and electricity and gas tariffs. Global crude oil prices and prices for most food commodities are also expected to stabilize, influencing the inflation outlook.
