Singapore’s 6.1% Inflation in 2022 drops to 4.8% in 2023; December Prices Rise more Quickly

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December consumer prices in Singapore increased more quickly than they did in November, despite a significant decrease in total inflation for the entire year 2023 compared to the previous year.

Overall inflation, as determined by consumer prices for all items, decreased to 4.8% on average in 2023 from 6.1% in 2022.

However, core inflation—which accounts for accommodation and private transportation costs to more properly reflect local household expenses—rose from 4.1% in 2022 to 4.2% last year.

The increase in the goods and services tax (GST) rate to eight percent is expected to have an influence on inflation rates in 2023, according to the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI).

Both inflation metrics were within sight of the government projections for 2023, which were approximately 4% for core inflation and 5% for overall inflation.

Core inflation increased to 3.3% year over year in December from 3.2% in November, surpassing the 3% economists predicted in a recent survey.

Core inflation is anticipated to be impacted in early 2024 by increases in GST and administrative prices, such as the announced increases in bus and train fares, which went into effect in late 2023, and electricity and gas tariffs in the first quarter of 2024, according to a statement released on January 23 by MAS and MTI.

Nonetheless, as import-cost pressures lessen and the domestic labor market becomes less tight, core inflation should continue its steady declining trend for the remainder of the year.

The core inflation prediction of 2.5% to 3.5% for 2024 was restated by MAS and MTI.

They did point out that, despite additional increases in the COE limit since November 2023, certificate of entitlement (COE) premiums have been erratic.

As a result, the next monetary policy statement, which is scheduled for January 29, will include an updated projection range for all-items inflation in 2024.

Even if inflation has decreased globally in 2023, MAS and MTI emphasized that there were still upside risks.

The dangers include new shocks to the world’s energy and shipping costs brought on by geopolitical conflicts, higher agricultural commodity prices as a result of unfavorable weather, and longer-than-anticipated tightness in the labor market at home.

Meanwhile, MAS and MTI noted that an unanticipated slowdown in the world economy would prompt a quicker release of cost and pricing pressures.