Core inflation eases below expectations; banks revise 2025 outlook to 0.5%

Nomura economists expect core inflation to dip as low as 0.1% in September before gradually firming.

Analysts have lowered their forecasts for Singapore’s core inflation following a sharper-than-expected decline in August, when the measure eased to 0.3% YoY—its weakest level since early 2021.

UOB Global Economics & Markets Research described the reading as “meaningfully weaker than historical norms,” falling below both market consensus and its own estimate.

It revised its 2025 core inflation forecast down to 0.5% from 0.6%, whilst maintaining its headline CPI forecast at 0.9%.

UOB noted that only a quarter of CPI basket items are now seeing price gains above 2%, pointing to “broad-based demand-driven disinflation.”

The bank also flagged a potential policy move by the Monetary Authority of Singapore (MAS), suggesting the central bank could ease in October or January by flattening the slope of the Singapore dollar nominal effective exchange rate to zero.

Nomura economists Euben Paracuelles and Charnon Boonnuch also cut their 2025 core inflation forecast to 0.5%, from 0.7%, aligning with the lower end of MAS’s 0.5–1.5% guidance range.

They expect core inflation to dip as low as 0.1% in September before gradually firming, supported by resilient growth. Nomura maintained its 2025 headline inflation forecast at 0.7% and sees MAS narrowing its core inflation range in October, but leaving FX policy unchanged.

Maybank similarly lowered its 2025 core inflation forecast to 0.5%, with headline inflation at 0.7%. It expects both figures to rise to 1.1% in 2026. The bank believes the MAS will hold policy steady in October, noting that inflation risks remain broadly balanced.