Executive Summary
Singapore experienced a sharp inflationary surge from 2022 to 2024, with headline CPI peaking at 6.1% in 2022 before moderating to 4.8% in 2023 and 2.4% in 2024. By late 2025, MAS Core Inflation had declined to approximately 0.4%–1.2%, approaching the trough of the disinflationary cycle. The episode was driven primarily by external shocks — global energy and supply chain disruptions — compounded by domestic factors including two staged GST hikes (2023–2024) and elevated housing costs. Singapore’s distinctive monetary policy framework, which manages the Singapore Dollar Nominal Effective Exchange Rate (S$NEER) rather than domestic interest rates, proved effective in dampening imported inflation. Looking ahead, MAS Core Inflation is forecast to normalise to 1.0–2.0% in 2026, with risks skewed modestly upward amid geopolitical uncertainty and a recovering global demand environment.
- Context and Background
Singapore occupies a structurally unique position in global macroeconomics. As a small, open economy with virtually no natural resources and a domestic market of approximately six million, it imports over 90% of its food supply and is heavily exposed to international commodity price movements, shipping costs, and exchange rate dynamics. These structural features make Singapore simultaneously highly vulnerable to imported inflation and, paradoxically, uniquely well-equipped to manage it through exchange rate policy.
The inflationary episode of 2022–2024 was exceptional in its breadth. Unlike previous bouts of inflation driven by a single commodity shock, Singapore faced a convergence of global energy price shocks, post-pandemic supply chain dislocations, and domestic policy-driven cost increases — particularly the two-stage GST increase from 7% to 9%, implemented in January 2023 and January 2024. - Singapore’s Inflation Trends: 2020–2025
2.1 Headline and Core Inflation: A Decade in Review
The following table summarises key inflation metrics across the most recent economic cycle:
Year CPI-All Items Inflation (YoY %) MAS Core Inflation (YoY %) Key Drivers
2020 −0.2% −0.3% COVID-19 demand collapse; deflation
2021 2.3% 0.9% Post-pandemic demand rebound
2022 6.1% 4.1% Global energy shock; supply chain disruptions
2023 4.8% 4.2% GST hike (7%→8%); persistent services inflation
2024 2.4% 2.7% GST hike (8%→9%); easing external costs
2025 (est.) ~0.9% ~0.5% Subsidy effects; declining import costs; disinflation
2026 (fcst.) 1.0–2.0% 1.0–2.0% Gradual normalisation; recovering unit labour costs
Source: Monetary Authority of Singapore (MAS); Department of Statistics Singapore (SingStat); MAS Macroeconomic Review, January 2026.
2.2 Composition of the Consumer Price Index
Understanding Singapore’s CPI basket weights is essential for interpreting inflation’s distributional consequences. Based on the 2024 Household Expenditure Survey, the three dominant expenditure categories are:
Housing & Utilities — 29.4% of household expenditure. This is the single largest component, reflecting Singapore’s high urban living costs. Accommodation sub-inflation rose 3.0% in 2024; utilities climbed 5.4%.
Food — 20.4%. Singapore imports over 90% of its food, rendering this category acutely sensitive to global commodity prices, exchange rates, and shipping costs. Food prices rose 2.8% in 2024.
Transport — 13.1%. Dominated by private vehicle costs (Certificate of Entitlement premiums) and public transit fares, both of which are subject to government administrative policy.
- Key Drivers of Inflation
3.1 External Factors: The Primary Engine
Academic and policy analysis consistently identifies external factors as the dominant driver of Singapore’s 2022–2024 inflationary cycle. The MAS has characterised the episode as largely imported, transmitted through three primary channels:
Global energy prices: The 2022 Russia-Ukraine conflict triggered a sharp spike in crude oil prices, which passed through directly into Singapore’s electricity tariffs, transport fuel, and food production costs.
Supply chain disruptions: Post-pandemic congestion in global shipping lanes raised freight costs significantly, increasing the cost of Singapore’s extensive merchandise imports across consumer goods, intermediate inputs, and capital equipment.
Regional food commodity inflation: Adverse weather events, export restrictions by major food-exporting nations, and elevated fertiliser costs raised global food commodity prices, passing through rapidly into Singapore’s import-dependent food supply chain.
3.2 Domestic Factors: GST, Housing, and Labour
While external shocks were predominant, domestic factors provided secondary amplification:
GST Increases (2023–2024)
Singapore implemented a two-stage increase in its Goods and Services Tax — from 7% to 8% in January 2023, and from 8% to 9% in January 2024. Analysis by MAS and academic researchers indicates the direct contribution of each 1 percentage-point GST increase to headline inflation was less than 1 percentage point, suggesting the tax hike was not the primary driver of the inflation surge. Nevertheless, its timing during a period of already-elevated global prices amplified the cost-of-living burden, particularly for lower-income households.
Housing and Accommodation
Residential rental costs remained elevated through 2024 due to pandemic-era construction delays, supply constraints in public housing, and strong demand from an expanded expatriate workforce. Accommodation inflation contributed 3.0% on a standalone basis in 2024 and remains a structurally sticky component of Singapore’s CPI.
Labour Market Tightness and Unit Labour Costs
Post-pandemic tightening of Singapore’s labour market, combined with progressive wage policy (including increases in the Local Qualifying Salary and Progressive Wage Model requirements), supported nominal wage growth. While this is a policy objective rather than an inflationary pathology, elevated unit labour cost growth in services sectors — notably food & beverage, hospitality, and healthcare — contributed to services inflation.
- Policy Responses
4.1 Monetary Policy: The S$NEER Framework
Singapore’s monetary policy is structurally distinct from virtually all other advanced economies. The Monetary Authority of Singapore (MAS) does not target interest rates or control the money supply directly. Instead, it manages inflation through the exchange rate — specifically by setting the slope, width, and centre of a policy band for the Singapore Dollar Nominal Effective Exchange Rate (S$NEER), which tracks the SGD against a trade-weighted basket of currencies.
This framework is particularly effective for import-intensive economies. By allowing or facilitating appreciation of the SGD, MAS directly lowers the Singapore-dollar cost of imported goods, food, and energy. The transmission mechanism is rapid and broadly applicable to the economy’s structural inflation vulnerabilities.
Key monetary policy actions during the cycle:
Policy Action Date Rationale
Steepened S$NEER appreciation slope Oct 2021 Early inflation prevention as global pressures built
Further steepening of appreciation slope Jan 2022 Accelerating imported inflation; proactive tightening
Re-centred S$NEER band upward Apr 2022 Headline inflation approaching 5%; additional tightening
Re-centred band; widened bandwidth Oct 2022 CPI at 6-decade high; aggressive tightening
Maintained prevailing policy band Oct 2022–Jan 2025 Sustained restrictive stance as disinflation commenced
Eased appreciation slope (twice) Jan & Apr 2025 Core inflation approaching target; growth risk management
Maintained prevailing band Jul 2025–Jan 2026 Balanced growth-inflation environment; policy on hold
Source: MAS Monetary Policy Statements, 2021–2026.
4.2 Fiscal Policy: Targeted Redistribution
Recognising that exchange rate policy cannot fully protect lower-income households from domestic cost-of-living pressures, the Singapore government deployed an extensive fiscal support framework:
The Assurance Package
Initially budgeted at S$6 billion in 2020 and subsequently enhanced to over S$10 billion, the Assurance Package was designed to offset the GST impact for the majority of Singaporean households for at least five years, with progressive targeting — lower-income households received proportionally larger transfers. Components included direct cash payouts, CPF Medisave top-ups, and U-Save utility rebates.
GST Voucher Scheme
The GST Voucher scheme provides regular cash transfers, MediSave top-ups, and U-Save rebates to eligible lower- and middle-income households. This scheme was enhanced during the inflationary episode to provide timely and targeted relief.
Community Development Council (CDC) Vouchers
All Singaporean households received CDC vouchers redeemable at supermarkets and hawker centres, directly reducing food expenditure for households across income groups — with emphasis on supporting HDB-resident families.
Service & Conservancy Charges (S&CC) Rebates
Enhanced rebates on public housing maintenance charges provided direct relief to the approximately 80% of Singapore’s population residing in Housing Development Board (HDB) flats.
Healthcare Subsidies
The introduction of the Healthier SG Chronic Tier in February 2024, combined with enhanced means-tested healthcare grants, moderated healthcare cost inflation — a category that had been rising due to both post-pandemic demand recovery and structural ageing demographics.
4.3 Supply-Side Interventions
The Singapore Food Agency (SFA) pursued active food supply diversification, expanding import source country agreements to reduce single-source dependency. The Housing Development Board accelerated flat construction and new BTO (Build-to-Order) launches to address near-term supply constraints in the residential market. COE (Certificate of Entitlement) supply for private vehicles was expanded to moderate private transport cost inflation.
- Economic and Social Impact
5.1 Macroeconomic Impact
Contrary to some advanced economies, Singapore’s inflationary episode did not precipitate a significant growth-inflation trade-off. GDP growth remained resilient:
GDP expanded by approximately 3.6% in 2023 and around 4% in 2024, driven by electronics manufacturing, financial services, and inbound tourism recovery.
The output gap remained positive through 2025 — the economy operating above potential — before projected convergence to approximately 0% in 2026.
Singapore’s real effective exchange rate (S$REER) weakened modestly from its May 2025 peak, reflecting relatively lower domestic inflation than trading partners.
5.2 Distributional Impact: Income Group Divergence
Inflation’s burden was not evenly distributed. SingStat’s CPI by household income group reveals important heterogeneity:
Lower-income households (bottom 20%) faced disproportionate food and utility cost burdens, as these categories consume a larger share of their budgets. However, they were also the primary beneficiaries of the progressive government support packages.
Middle-income households often faced the most acute squeeze — too affluent to qualify for the full suite of support measures, yet insufficiently buffered by financial assets or income growth to fully absorb elevated food, housing, and healthcare costs.
Higher-income households (top 20%) experienced the smallest effective inflation impact; lower private vehicle costs (following COE peak correction) had a larger dampening effect given their higher transport expenditure shares.
5.3 Sectoral and Business Impact
Inflation imposed uneven costs across Singapore’s business landscape. Labour-intensive sectors — food & beverage, hospitality, retail, and healthcare — faced a compounding squeeze from both elevated input costs and progressive wage floor requirements. Many F&B operators implemented selective menu price increases of 5–15%, with some closures particularly among small independent operators. Conversely, Singapore’s manufacturing and financial services sectors — which are less labour-intensive and more exposed to global pricing benchmarks — were less acutely affected by domestic wage inflation.
5.4 Household Purchasing Power and Real Wages
The inflationary cycle of 2022–2024 temporarily eroded real wages for many Singaporeans. Nominal wage growth of approximately 3–5% annually failed to fully compensate for headline inflation peaks of 6.1%. The progressive narrowing of inflation to below nominal wage growth by 2024 and further into 2025 indicates a gradual recovery of real purchasing power — though the absolute price level remains structurally higher than pre-pandemic benchmarks.
- Inflation Outlook: 2026 and Beyond
6.1 Baseline Scenario
The most current MAS Macroeconomic Review (January 2026) provides the following baseline outlook:
Indicator 2025 (Estimate) 2026 (Forecast) Source
CPI-All Items Inflation ~0.9% (YoY avg.) 1.0–2.0% MAS / SingStat
MAS Core Inflation ~0.5% (YoY avg.) 1.0–2.0% MAS
GDP Growth ~4.0% Slower; near-trend MTI / MAS
Output Gap Positive ~0% (closes) MAS Oct 2025
Consumer Inflation Expectations (1-yr) 3.3% (Sep 2025) 3.5% (Dec 2025) DBS-SKBI SInDEx, SMU
Source: MAS Macroeconomic Review January 2026; DBS-SKBI SInDEx Q4 2025, Singapore Management University.
The January 2026 MAS Review notes that Core Inflation has picked up from its trough and will continue normalising through 2026. Key drivers of this re-acceleration include: the unwinding of temporary government subsidy effects introduced in 2024–2025, a projected recovery in domestic services unit labour costs as productivity growth normalises, and a smaller drag from import prices as global crude oil prices decline less steeply than in 2025.
6.2 Upside Risks
Geopolitical supply shocks: New conflicts or escalation of existing ones could trigger sudden spikes in global energy and shipping costs, rapidly transmitting into Singapore’s import-dependent price structure.
Renewed US tariff escalation: Additional rounds of US trade protectionism could disrupt regional supply chains, elevating intermediate goods costs for Singapore’s manufacturing sector.
AI investment boom correction: An abrupt correction in global AI-related capital expenditure could negatively affect Singapore’s technology services sector and broader demand conditions.
Wage-price dynamics: If nominal wage growth accelerates more sharply than anticipated — particularly in services — unit labour cost pass-through could sustain services inflation above current projections.
6.3 Downside Risks
Global demand weakness: A sharper-than-expected global growth slowdown, including deterioration in China’s economy, could reduce Singapore’s export demand and depress domestic corporate investment and hiring.
Deflationary spillovers from China: Persistent overcapacity and weak domestic demand in China have exerted disinflationary pressure on global goods markets; continued Chinese deflation could keep Singapore’s imported goods prices subdued.
Oil price decline: A sharper-than-expected fall in global crude prices — driven by OPEC+ supply increases or demand softness — would temporarily reduce Singapore’s non-core inflation further.
6.4 MAS Policy Stance
As of January 2026, MAS has maintained the prevailing rate of appreciation of the S$NEER policy band, with no change to its width or the level at which it is centred. This signals a broadly neutral policy stance, appropriate for an economy where the output gap is closing toward zero and inflation is re-normalising within a manageable range. The MAS retains flexibility to ease further if global growth deteriorates materially, or to tighten if inflation surprises to the upside.
- Policy Recommendations and Strategic Solutions
7.1 For Policymakers
Maintain Exchange Rate Policy Flexibility
Singapore’s S$NEER framework should remain the primary inflation-management instrument. Policymakers should resist political pressure to weaken the SGD for competitiveness reasons during periods of upside inflation risk, as imported inflation transmission in Singapore is both rapid and broad-based.
Institutionalise Counter-Cyclical Fiscal Support
The experience of the Assurance Package and CDC Voucher schemes demonstrates the efficacy of targeted, progressive fiscal transfers in cushioning inflation’s distributional impact without materially aggravating aggregate demand. A standing legislative framework for automatic stabilisers — triggered by defined inflation thresholds by income group — would reduce the lag in policy response in future episodes.
Accelerate Food Supply Diversification
Given that Singapore imports over 90% of its food, reducing the concentration of import sources is a structural imperative. Singapore’s 30-by-30 food production goal (producing 30% of nutritional needs domestically by 2030) should be sustained and expanded. Additionally, diplomatic food security agreements with diverse export partners should be formalised.
Housing Supply Management
Accommodation inflation, at 29.4% of the CPI basket, is the single largest potential contributor to headline inflation volatility. HDB should implement systematic forward planning for BTO supply, with project pipelines calibrated to demographic projections and international migration flows, reducing the risk of future supply-demand mismatches in the rental market.
7.2 For Households
Portfolio and Savings Strategy
Singaporean households should ensure savings are not parked in instruments earning below the inflation rate. The CPF Ordinary Account rate (currently 2.5%) and Special Account rate (4.0%) provide inflation-partially-compensatory yields. Additionally, Singapore Savings Bonds and T-bills have offered yields of 3–4% during the recent high-rate environment, providing accessible capital-preservation options.
Consumption Strategies
Practical consumer adaptations with significant aggregate budget impact include switching to house-brand groceries (particularly relevant given Singapore’s well-developed supermarket private-label market), leveraging hawker centres and government-subsidised food infrastructure rather than commercial restaurants, and utilising government voucher schemes for essential expenditure.
Debt Management
In an elevated interest rate environment, households carrying high-interest revolving debt — including credit cards — face a compounding real-cost burden. Prioritising the repayment of such liabilities is among the highest-return financial actions available to indebted households.
7.3 For Businesses
Cost Structure Optimisation
Labour-intensive businesses in sectors facing sustained wage floor increases should invest in productivity enhancement — through automation, digitisation, and workflow re-engineering — to control unit labour cost growth and reduce inflation pass-through to prices.
Supply Chain Resilience
Businesses dependent on single-country supply chains should pursue geographic diversification of suppliers. Singapore’s strategic location and extensive free trade agreement network — including CPTPP and ASEAN FTAs — provide preferential access to diverse source markets. Dual-sourcing and buffer inventory strategies can reduce vulnerability to acute supply-side inflation shocks.
- Conclusion
Singapore’s management of the 2022–2024 inflationary cycle represents a broadly successful application of its distinctive monetary and fiscal policy toolkit. The S$NEER appreciation framework effectively suppressed imported inflation transmission; targeted fiscal transfers mitigated distributional harm; and supply-side interventions addressed sector-specific bottlenecks. The outcome — a soft landing in which inflation moderated from 6.1% to below 1% over three years without a significant growth contraction — compares favourably with the experience of many advanced economies that relied on aggressive interest rate tightening and faced heightened recession risk.
Looking ahead to 2026, Singapore’s inflation environment is one of gradual re-normalisation rather than renewed acceleration. Core Inflation is expected to stabilise in the 1–2% range — consistent with the MAS’s medium-term price stability objective. The principal risks are asymmetrically external: geopolitical supply shocks, renewed trade protectionism, and potential volatility in global commodity markets. Singapore’s structural openness, which creates ongoing inflation vulnerability, is simultaneously the source of the exchange rate policy potency that makes its inflation management framework so effective among small open economies.
The episode reinforces a core macroeconomic lesson: for a small, open, resource-constrained economy, inflation is fundamentally a global phenomenon managed at the margin through domestic institutional capacity. Singapore’s sustained investment in that capacity — through MAS’s exchange rate framework, SFA’s food security infrastructure, and the government’s progressive social support apparatus — provides the resilience that will be necessary to navigate future inflationary episodes.
References
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