Inflation Outlook 2025–2026: What Experts Predict for Singapore

After experiencing one of the sharpest inflation cycles in decades between 2022 and 2024, Singapore now stands at a critical turning point. With price pressures gradually easing but cost levels remaining high, households, businesses, and policymakers are all focused on a key question: what will inflation look like in Singapore in 2025 and 2026?

This article explores expert forecasts for Singapore’s inflation outlook, the domestic and global forces shaping price trends, the risks that could derail stability, and what the next two years could mean for households, wages, housing, and business costs.

Understanding Singapore’s Recent Inflation Cycle

Singapore’s inflation surge was driven by a rare convergence of shocks:

Global supply chain disruptions after COVID-19
Energy and food price spikes following geopolitical conflicts
A rapid rebound in domestic demand
Tight labor markets pushing up wages
Sharp increases in housing rents and utilities

By 2024, headline inflation had moderated significantly from its peak, but the overall price level remained far higher than before the pandemic. This is critical: lower inflation does not mean lower prices—it only means prices are rising more slowly.

What Experts Expect for Inflation in 2025–2026

Economists broadly agree that Singapore is entering a phase of disinflation rather than deflation. This means inflation will likely stay positive but at more manageable levels.

Key Forecast Themes:

Inflation is expected to average between 2% and 3%
Core inflation should continue easing but remain above pre-2020 norms
Food and services inflation will be “stickier” than goods inflation
Housing-related inflation will moderate slowly due to supply constraints

Singapore is unlikely to return quickly to the ultra-low inflation environment seen in the 2010s.

Global Forces Shaping Singapore’s Inflation Outlook

1. Energy Prices

Energy prices remain a major wildcard. While oil and gas prices have stabilized compared to the 2022 shock, risks remain from:

Middle East instability
Russia-Ukraine tensions
Production cuts by oil-exporting nations

Since energy costs affect transport, electricity, food logistics, and manufacturing, renewed energy shocks could reignite inflation quickly.

2. Global Food Markets

Climate change is creating persistent volatility in global agriculture. Droughts, floods, and heatwaves continue to disrupt food output. Export restrictions by some producing countries also add risk.

Even with Singapore’s diversified import sources, food inflation is expected to remain structurally higher than before COVID-19.

3. China’s Economic Recovery

China’s recovery path will influence global manufacturing costs and shipping prices. A weak Chinese recovery suppresses inflation via lower demand, while a strong rebound could push up commodities and freight rates.

4. Global Interest Rate Cycles

If major economies maintain higher interest rates for longer, global demand may soften, keeping inflation contained. However, rapid rate cuts could revive demand-driven price pressures.

Domestic Drivers of Inflation in 2025–2026

1. Services Inflation and Wages

Services inflation is now the dominant source of price pressure in Singapore. Labor-intensive sectors such as healthcare, retail, food services, and education face rising wage costs due to:

Labor shortages
Progressive Wage Model adjustments
Higher expectations for service quality

Because wages rarely fall, services inflation is expected to remain sticky through 2025 and possibly 2026.

2. Housing and Rental Market Pressures

Private rental inflation surged earlier due to population growth and limited new supply. While new housing completions will gradually ease pressures, experts believe:

Rental moderation will be slow
Mortgage servicing costs may remain elevated
Utilities and maintenance charges will continue rising gradually

Housing-related costs will remain a key structural inflation driver.

3. Goods Inflation vs Services Inflation

Imported goods inflation has cooled significantly as global supply chains normalize. Prices of electronics, clothing, and household goods are expected to stay stable. However,:

Services inflation will remain more persistent
Healthcare and education costs will rise faster than goods
Insurance premiums and personal services will add pressure

The Role of the Monetary Authority of Singapore (MAS)

Singapore’s inflation outlook depends heavily on MAS’s exchange-rate policy. By managing the Singapore dollar rather than domestic interest rates, MAS:

Limits imported inflation
Keeps foreign goods affordable
Stabilizes investor confidence

For 2025–2026, MAS is expected to:

Maintain a cautious, neutral policy stance
Allow gradual SGD appreciation if inflation risks rise
Avoid abrupt easing that could fuel imported inflation

This disciplined monetary framework is a major reason Singapore is expected to avoid runaway inflation.

Wage Growth vs Inflation: The Real Income Outlook

Experts anticipate moderate wage growth of around 3–5% annually over the next two years. Whether real incomes rise depends on how inflation behaves:

If inflation stays near 2–3%, real wages should gradually recover
If food, housing, and services inflation stay elevated, real income gains could remain uneven

Lower-income workers will continue benefiting from wage reforms, but middle-income households may still face real income pressure due to housing and education costs.

What Inflation 2025–2026 Means for Households

Cost of Living

Daily essentials will not become cheaper—but price increases should be less painful than during 2022–2023. Households should expect:

Slower growth in supermarket prices
Continued upward pressure at hawker centres
Higher healthcare, insurance, and childcare costs

Savings and Investments

Lower inflation improves the real returns on:

CPF savings
Fixed deposits
Government bonds

However, asset markets may become more volatile if global interest rate cycles reverse quickly.

Debt and Borrowing

Mortgage borrowers may benefit if global interest rates ease gradually, reducing debt servicing costs. However, banks are unlikely to return to ultra-low interest rates of the 2010s anytime soon.

Business Costs and Pricing Power

For businesses, the inflation outlook brings mixed implications:

Relief From Goods Cost Pressures

Import prices, shipping costs, and raw material expenses are stabilizing, benefiting manufacturers and retailers.

Persistent Services Cost Pressure

Labor costs, rents, utilities, and insurance premiums continue rising, squeezing margins in hospitality, F&B, healthcare, and retail.

Many businesses will still need to pass on selective cost increases, particularly in service-based sectors.

Risks That Could Derail Singapore’s Inflation Outlook

1. Renewed Global Energy Shock

A sharp rise in oil and gas prices would raise transport, food, and electricity costs.

2. Escalation of Geopolitical Conflicts

Expanded conflicts could disrupt food, fertilizer, and shipping routes.

3. Climate-Induced Food Shortages

Extreme weather could trigger renewed food price spikes.

4. Wage-Price Spiral Risk

If wage demands accelerate sharply, services inflation could become entrenched.

Why Inflation Is Unlikely to Collapse to Pre-2020 Levels

Experts widely agree that Singapore will not return to the ultra-low inflation of the last decade due to:

Structural wage reforms
Higher energy transition costs
Aging population driving healthcare demand
Greater global supply chain fragmentation
Rising geopolitical risk premia

In other words, 2–3% inflation may become Singapore’s new normal.

Policy Priorities for 2025–2026

To keep inflation manageable, policymakers will focus on:

Exchange rate stability via MAS
Expanding housing supply
Strengthening food import diversification
Managing healthcare and education cost growth
Supporting productivity-led wage growth

Fiscal measures will remain targeted rather than broad-based to avoid overstimulating demand.

What Experts Say About Long-Term Inflation Stability

Most economists agree that Singapore’s institutional strengths—strong currency management, fiscal discipline, supply diversification, and housing policy controls—give it a decisive advantage in controlling inflation compared to many global peers.

However, Singapore cannot fully insulate itself from global price shocks, especially in food and energy. Stability will depend on continuous policy calibration rather than one-off interventions.

Outlook Summary: Inflation in 2025–2026 at a Glance

Inflation expected to average 2–3%
Goods inflation largely under control
Services and housing inflation remain sticky
Food prices remain vulnerable to global shocks
Wage growth likely to match or slightly exceed inflation
Real incomes should recover gradually but unevenly

Key Takeaways

Singapore is moving into a phase of moderate, stable inflation
The biggest risks remain energy prices, food supply shocks, and services inflation
Housing and wage-driven services costs will shape domestic inflation
Monetary policy via exchange rate management remains highly effective
Households should prepare for higher baseline living costs but slower increases
Businesses will face persistent cost pressure in labor-intensive sectors

Conclusion

The inflation outlook for Singapore in 2025–2026 is cautiously optimistic. The worst of the post-pandemic price surge appears to be over, and inflation is expected to settle into a more manageable range. However, stability does not mean relief from high prices—only that future increases will be less severe.

Households will still need to navigate elevated housing, food, and healthcare costs. Businesses will continue facing upward pressure on wages and services expenses. Policymakers, meanwhile, must balance inflation control with economic growth in a world marked by persistent geopolitical and climate uncertainty.

Singapore’s strong institutions, disciplined monetary policy, and proactive social support measures place it in a stronger position than most economies to manage this transition. But the era of ultra-cheap living is firmly in the past. The next two years will define how successfully Singapore adapts to its new inflation reality.