RHB expects Singapore inflation to stay muted through 2025

The report forecasts headline inflation at 1.6% and core inflation at 1.1% for the year.

Singapore’s inflation is expected to stay muted through 2025, according to RHB Bank.

The report forecasts headline inflation at 1.6% and core inflation at 1.1% for the year, maintaining previous estimates despite underwhelming consumer price data in March.

Last month’s CPI came in at 0.9% YoY, unchanged from February and falling short of both RHB’s and Bloomberg’s projections.

The subdued inflation outlook is largely driven by falling global commodity prices, which are easing cost pressures for Singapore’s import-reliant economy. RHB noted that efforts to boost oil production, combined with slower external demand, particularly from the United States, are helping to curb inflationary pressures across ASEAN, including Singapore.

The report also pointed to the Singapore dollar’s continued strength as another mitigating factor. The Singapore dollar nominal effective exchange rate (S$NEER) currently stands 0.48% above the midpoint, having appreciated since MAS’s policy easing earlier this year.

A stronger currency helps reduce the cost of imported goods, contributing to lower overall inflation.

Another key factor weighing on prices is the weakening global economic environment. Growth in both the US and China is expected to slow amid escalating trade tensions, which may reduce demand for Singapore’s exports and dampen consumer and business spending.

RHB expects Singapore’s GDP growth to decelerate to around 2% in 2025, with downside risks potentially dragging it further into the 0.5% to 1% range.

As economic momentum slows, discretionary spending and tourism-related expenditures could also decline, adding to deflationary pressures.

Despite these broad deflationary trends, the report acknowledged some possible short-term upside risks to inflation. Tourism activity, particularly driven by major events like Lady Gaga’s May 2025 concert in Singapore, could lift demand for local services, transportation, and retail.

This temporary boost could raise prices in hospitality-related sectors, although the impact is likely to be limited.

RHB expects the Monetary Authority of Singapore to maintain its current policy stance throughout the year, although the balance of risk may tilt toward easing in the second half if inflation softens further or if trade tensions worsen.

According to the central bank’s projections, both core and headline inflation are expected to average between 0.5% and 1.5% in 2025.

With Singapore’s output gap turning negative and inflationary pressures expected to stay low, policymakers appear set to stay the course—unless global headwinds force a shift in direction.