Inflation set to edge higher as 2026 pressures firm: analyst

On the domestic front, unit labour costs may stabilise at slightly higher levels.

Inflation in Singapore is expected to edge higher in 2026 after bottoming out in the third quarter of 2025, according to DBS.

Core inflation averaged below 1% YoY in the first ten months of 2025.

For 2026, the bank forecasts core inflation at 1.0% and headline inflation at 1.2%, both within the Monetary Authority of Singapore’s 0.5% to 1.5% projection range.

DBS said the pickup will be mild. Externally, the global disinflation impulse is fading. Oil prices are still easing but at a slower pace, with Brent projected at about US$62 to US$67 a barrel in 2026, whilst global food prices are expected to remain stable.

The bank added that reduced deflationary spillovers from China, as “anti-involution” measures curb hyper-competition, should also limit downward price pressure.

On the domestic front, unit labour costs may stabilise at slightly higher levels, but DBS expects pass-through to consumers to remain manageable.

Administrative and green-related measures will add some upward pressure. These include the scheduled rise in Singapore’s carbon tax to $45 per tonne of CO₂e in 2026, which DBS estimates could lift electricity tariffs by around 4%, and a sustainable aviation fuel levy that will raise some travel-related prices.

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