December inflation rises slightly; outlook for 2024 shows moderation in core inflation
Singapore’s inflation for 2023 closely matched the Monetary Authority of Singapore (MAS) and Ministry of Trade and Industry (MTI) forecasts, with headline inflation averaging 4.8% for the year, slightly surpassing the 4.7% mark set by the authorities. Core inflation, excluding accommodation and private transport, was at 4.2%, also in line with official expectations of around 4%.
In December, both headline and core inflation showed slight increases. Headline inflation reached 3.7% in December, up from 3.6% in November, driven by higher private transport costs and a pick-up in services inflation. Core inflation rose to 3.3%, up from 3.2% in November, primarily due to the higher cost of services.
The rise in inflation was partly attributed to the GST (goods and services tax) increase, which raised the tax rate to 8% in 2023. As global oil prices fell during the fourth quarter of 2023, MAS and MTI expect inflation to stabilize in 2024, with a gradual moderation in core inflation, projected to average 2.5% to 3.5%. The authorities also predict that services associated with international leisure travel will experience a decline as global hospitality supply improves.
Looking ahead, the inflation forecast for 2024 suggests headline inflation will be in the 3% to 4% range, with the potential for ongoing inflationary pressures, particularly in areas impacted by the GST and rising administrative prices.
