Inflation at 1%. Why do things still feel so expensive?

Singapore core inflation eases to 1% in January, better than expected

Headline inflation up at 1.4% from 1.2% in December, driven by higher accommodation costs Read more at The Business Times.

The Business TimesLow Youjin

Inflation has fallen from the heights of 2023. As reported on businesstimes, Singapore's core inflation has eased to 1% in January 2026.

That sounds like a good thing. Right?

Let's not mistake disinflation with deflation. Disinflation means things are still getting expensive, but at a slower pace.

If you feel that Singapore is expensive. It's quite likely our price expectation is anchored at pre-covid level. The days where GST is 7% and could get a kopi-o-kosong at $0.90

In 2025, Singapore clinched the 4th costliest city for expats and 28th for locals.

But if we change the presentation of data to country instead of city, it tells a different story.

Let's say we rank the countries based on the position of their most expensive city. Singapore will rank 3rd in the world for expats and 10th for locals.

It made me wonder. Where will we be in 10 years?

I thought, let's look at the last 10 years of inflation data. Lucky me, the worldbank provides the inflation rate, CPI data.

According to World Bank CPI Data, Singapore's 10Y inflation rate. 2015 - 2024 : 1.58% p.a.

As a thought experiment

1. suppose the top 10 country starts at same starting line
2. inflation behaves the same way for the next 10 years

Singapore might rise 2 position for locals!

Quite likely, we're going to stay as one of the costliest city & country in the world.

How do we as a nation and individual tackle this problem?

On a national level, we've combated inflation via stronger currency, government transfer (GST voucher) and higher real wage growth over the last few years of elevated inflation.

And maybe, we have exported some of our inflation to JB or other countries 😜

But as individual, how can we help ourselves? 

If we are working hard and still feeling the squeeze of rising costs, how?

The answer is 1.58%.

Make your money work harder. It should be working harder than you!

Our wealth cannot be growing slower than the long term inflation.

If your money is idling, go get some interest that's higher than 1.58%

If you are investing, add another 1.58% p.a to your retirement figures.

What are you doing to make sure your money is growing faster than 1.58%?

That's all from me, a ramble on inflation!

~ Compounding what matters