Inflation Down to 2.4% in 2024, Yet Uneven Burden Remains

Singapore’s inflation rate has dropped significantly to 2.4% in 2024, down from a peak of 6.1% in 2022, offering some relief to households across the city-state. According to the Department of Statistics (SingStat), this decline—following a rate of 4.8% in 2023—reflects lower costs for cars, airfares, and certain food items. Yet, beneath the headline figures, disparities persist. While higher-income households have benefited more from falling transport costs, lower-income families continue to grapple with rising bus and train fares and food prices, highlighting the uneven impact of inflationary trends.

A Steep Decline, but Not for Everyone

The sharp drop in headline inflation, which includes private transport and accommodation costs, marks a return to levels closer to Singapore’s historical average of 1.8% between 1981 and 2021. SingStat’s report, released on 23 January 2025, attributes the easing to cheaper cars and motorcycles, as well as declining airfares for the second consecutive year. Clothing and footwear prices have also fallen, aided by e-commerce platforms offering competitive pricing.

However, the burden of inflation is not evenly distributed. Lower-income households faced a price increase of 2.7% in 2024, compared to 2.5% for middle-income earners and just 2.1% for the wealthiest. When excluding rents for owner-occupied accommodation—a more representative measure for most households—the consumer price index (CPI) shows a similar disparity: 2.6% for the lowest-income group, 2.4% for the middle, and 2.0% for the top tier.

“Cars constitute a bigger share of expenditure for higher-income households,” SingStat noted, explaining why cheaper vehicles had a “larger dampening impact” on their inflation levels. In contrast, lower-income families, more reliant on public transport, were hit harder by fare hikes, which took effect in December as part of an annual review to balance affordability with the commercial viability of transport operators.

Transport and Food: Persistent Pain Points

Public transport fares remain a significant concern for lower-income households. Oxford Economics analyst Sheana Yue highlighted that fares undergo a “one-off increase” each year, contributing to inflationary pressures in the transport category. While the government has provided public transport vouchers to offset some of these costs for vulnerable groups, the hikes still bite. Ms Yue also flagged potential risks ahead, including “higher oil prices and energy costs” driven by global uncertainties, such as US President Donald Trump’s threats to impose tariffs on key trading partners. “We will probably see higher price pressures in the transportation basket,” she cautioned, though she added that inflation is unlikely to spiral out of control in 2025.

Food prices, another critical expenditure for all households, continued to rise in 2024, albeit at a slower pace than in previous years. Increases in the cost of vegetables like spinach, cabbage, and potatoes were partially offset by cheaper seafood, pork, poultry, and eggs. At the retail level, price hikes at restaurants moderated to 3.8%, while hawker centres saw a 4.4% jump. Associate Professor Walter Theseira of the Singapore University of Social Sciences pointed to a global phenomenon known as “cheapflation,” where cheaper products see faster price increases than premium alternatives. “When everybody complains about the price of hawker food going up, that is the cheaper end of retail food going up,” he observed. Prof Theseira also noted the role of e-commerce in curbing costs for some items, such as clothing and footwear, which have declined across all income groups. “You can buy a lot of things cheaper online than what you used to spend through traditional channels,” he said.

Adapting to Rising Costs

For many Singaporeans, coping with inflation means adjusting spending habits. NTU Assistant Professor Chua Yeow Hwee suggested that consumers, particularly higher-income households, have more flexibility to switch to cheaper, lower-quality products to maintain their budgets. Lower-income families, however, often lack such options. Ms Tan Huey Min, general manager of Credit Counselling Singapore, offered practical advice: “If every week, you take a cab two to three times, cut down. Plan your time, wake up earlier so you won’t miss the bus or train. You can save $20 to $30.”

Such adjustments, while helpful, underscore the broader challenges faced by those with limited financial buffers. Discretionary spending—on holidays, dining out, or other non-essentials—can be trimmed, but essentials like food, transport, and utilities remain non-negotiable for most. SingStat identified accommodation, food, healthcare services, holiday expenses, and public transport as the primary drivers of inflation in 2024, with little immediate relief in sight for these categories.

Broader Economic Context

Singapore’s inflation trajectory must be viewed against a backdrop of global economic volatility. The city-state, heavily reliant on trade and external markets, is vulnerable to international price shocks, whether from energy costs or supply chain disruptions. The potential for higher oil prices, as flagged by Ms Yue, could exacerbate pressures in the transport and energy sectors, even if overall inflation remains manageable in the near term.

Domestically, the government has implemented measures to cushion the impact on vulnerable households. Public transport vouchers, subsidies for utilities, and other targeted interventions have provided some relief, though their effectiveness varies across income groups. The annual fare review process, while ensuring the sustainability of transport operators, often sparks public debate about affordability—a tension that is unlikely to dissipate soon.

Moreover, the phenomenon of cheapflation raises questions about long-term trends in cost-of-living disparities. As Prof Theseira noted, cheaper goods and services—often relied upon by lower-income households—are seeing faster price increases, effectively widening the gap in real purchasing power between income groups. This dynamic, coupled with rising costs for essentials, suggests that while headline inflation may be cooling, the lived experience of inflation remains starkly different for Singapore’s poorest.

Looking Ahead: A Cautious Optimism

Analysts remain cautiously optimistic about Singapore’s inflation outlook for 2025. Ms Yue’s assessment that price pressures in transport are unlikely to push inflation to alarming levels offers some reassurance, though external risks loom large. The government’s proactive stance—through subsidies and vouchers—will likely continue to play a critical role in mitigating the impact on lower-income households.

Yet, the uneven distribution of inflationary pressures highlights a deeper challenge: ensuring that economic relief reaches those who need it most. For lower-income families, the rising cost of public transport and hawker food is not just a statistic but a daily struggle. For higher-income households, cheaper cars and airfares provide a buffer that others cannot access. Bridging this divide will require not only short-term interventions but also sustained efforts to address structural inequalities in expenditure patterns.

As Singapore navigates this complex economic landscape, the inflation story of 2024 serves as a reminder of the delicate balance between growth and equity. While the headline figures paint a picture of recovery, the reality for many households tells a more nuanced tale—one of persistent pressures and small, hard-won savings. For now, the city-state can celebrate a return to more stable price levels, but the work of ensuring that stability benefits all its residents is far from over.