February 12, 2025
SINGAPORE – Inflation eased again in 2024 after the highs of 2022, thanks in part to cheaper cars, certain food items, clothing and footwear.
Price pressures remain, but households in all income groups have seen inflation fall by between 1.6 and 3 percentage points over the past 12 months.
Singapore’s headline inflation – this includes private transport and accommodation costs – hit 6.1 per cent in 2022, the fastest rate of increase since 2008 and markedly above the historical average of 1.8 per cent from 1981 to 2021.
Inflation eased to 4.8 per cent in 2023 and fell again to 2.4 per cent in 2024, noted the Department of Statistics (SingStat) on Jan 23.
The lowest-income households experienced price increases of 2.7 per cent in 2024, just ahead of the 2.5 per cent jump for middle-income earners and the 2.1 per cent for top earners.
Excluding rents of owner-occupied accommodation, the consumer price index (CPI) came in at 2.6 per cent for the lowest-income households, 2.4 per cent for middle-income households and 2 per cent for high-income groups.
People who own their homes do not pay rent, so the CPI figure that excludes this outlay is more representative of average households.
SingStat noted that the main contributors to inflation in 2024 were accommodation, food, hospital and outpatient services, holiday expenses and bus and train fares.
The inflationary pressures were offset by lower prices of cars and motorcycles, as well as other transport services such as airfares, which fell for two consecutive years.
It was for this reason that the top earners experienced a smaller increase in inflation in 2024 than other income groups.
SingStat noted that “cars constituted a bigger share of their expenditure basket”, so cheaper vehicles had a “larger dampening impact” on their inflation levels.
In contrast, lower-income households were hit by higher bus and train fares.
Oxford Economics economist Sheana Yue said transport fares undergo a “one-off increase” every year, with transport fare hikes coming into effect in December.
Fares are reviewed annually to ensure they stay affordable while also ensuring that transport operators remain commercially viable.
Ms Yue added that the Government has continued to give public transport vouchers to help the lower-income folk defray some of the fare increases.
There are some inflation red flags for the transport category.
Ms Yue noted the “risk of potentially higher oil prices (and) higher energy costs” because of US President Donald Trump’s threat to slap tariffs on key US trading partners.
Ms Yue said: “Overall, we will probably see higher price pressures in the transportation basket.
“We are currently not expecting it to be so high that it will push up inflation by too large a margin. I do not think inflation will be a massive problem in 2025.”
Food prices, a key expenditure item for all households, continued to rise in 2024, albeit at a slower pace. Pricier spinach, cabbage, kale, potatoes, carrots, onions and other items were offset by cheaper seafood, chilled pork, chilled poultry and eggs.
Meanwhile, price increases at restaurants and hawker centres moderated from 2023.
Restaurants registered a 3.8 per cent increase in 2024, while hawker centres saw a 4.4 per cent jump.
“When everybody complains about the price of hawker food going up, that is the cheaper end of retail food going up,” said Associate Professor Walter Theseira, who teaches economics at the Singapore University of Social Sciences.
Prof Theseira noted that cheapflation, a global phenomenon where prices are rising at a faster rate for cheaper products compared with their more premium counterparts, is also playing out in Singapore.
He added that e-commerce has brought about price savings. “You can buy a lot of things cheaper online than what you used to spend on them through traditional channels.”
For example, clothing and footwear costs have actually gone down across all household groups, Prof Theseira added.
Consumers can switch behaviour and buy cheaper but lower-quality products, said NTU assistant professor of economics Chua Yeow Hwee. He added that high-income households have more scope to do this and so keep their budget largely intact.
Consumers can also cut down on discretionary spending when things get expensive, said Ms Tan Huey Min, general manager of Credit Counselling Singapore.
“If every week, you take a cab two to three times, cut down. Plan your time, wake up earlier so you will not miss the bus or train. You can save $20 to $30,” she added.
“You make adjustments to your spending habits by saving a bit here and there. This can help cover any increase in utilities or groceries.”