General rise in prices over time, which reduces the purchasing power of money. Singapore CPI has averaged ~2%–3% over the long run.
Inflation is the general rise in prices of goods and services over time, reducing the purchasing power of money. A dollar today buys less than a dollar did 10 years ago.
Measured by the Consumer Price Index (CPI) — a basket of typical household purchases. The MAS Core Inflation measure excludes accommodation and private transport (more volatile) to track underlying trends.
Long-run average: ~2% – 3% annually since 2000.
2022 – 2023: peaked at 6.6% headline inflation, the highest since the 2008 spike.
2024 – present: moderating to 2% – 3% as global supply chains normalised.
Long-run inflation is the single biggest reason cash savings lose value over decades.
Retirement: a S$4,000 monthly expense today at 3% inflation becomes S$7,200 in 20 years. CPF LIFE Escalating Plan partially counters this; cash-only plans do not.
Investment hurdle: an investment must beat inflation to preserve real purchasing power. CPF OA at 2.5% is roughly inflation-matching in normal years.
Real vs nominal: always think in real terms (post-inflation) for long-horizon goals.
Equities: stocks broadly track nominal GDP growth, which includes inflation. Long-run real return ~5% – 7%.
Property: rental income often rises with inflation; property values too over long periods (though with volatility).
Inflation-linked bonds: Singapore doesn't issue retail TIPS-equivalents, but US TIPS are accessible via ETFs.
Cash and fixed deposits: lose real value during inflation. Hold only what you need for liquidity, not as a long-term store of wealth.
A general rise in prices over time, reducing the purchasing power of money. Measured by the Consumer Price Index (CPI). Singapore's MAS Core Inflation strips out accommodation and private transport for a less volatile underlying-trend measure.
Long-run average ~2% – 3% annually. Peaked at 6.6% headline / 5.5% core in 2022 – 2023 amid global supply-chain shocks. Moderated to 2% – 3% in 2024 – 2025. CPF rates (2.5% on OA, 4% on SA / MA / RA) approximately match or beat long-run inflation.
Equities (broadly track nominal GDP growth, which includes inflation), real estate (rents tend to rise with inflation), inflation-linked bonds (TIPS via US ETFs since SG doesn't issue retail equivalents), CPF SA at 4% guaranteed. Avoid holding too much cash long-term.
Nominal returns ignore inflation; real returns subtract it. Long-run real S&P 500 return ~6% – 7%; nominal ~9% – 10%. Always think in real terms for retirement planning — your future expenses will also inflate, so what matters is purchasing-power growth.