Headline inflation in Singapore accelerated to 2.2% last month, driven by higher energy costs linked to the Iran conflict and rising electricity tariffs, marking the fastest pace in nearly two years. However, the reading came in below market expectations of 2.3%. Core inflation, which strips out private transport and accommodation costs, rose to 2.0%, also missing the 2.2% forecast by analysts polled in a Reuters survey.
The city-state reported that the consumer price index increased 2.2% year-on-year in July, a notable acceleration from the 1.9% recorded in June. On a month-on-month basis, prices dipped by 0.2%. The Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) issued a joint statement attributing the uptick to persistently elevated global energy prices, which have pushed up electricity and gas costs domestically, alongside higher public transport fares.
According to the official announcement, international oil prices remain high and volatile, while adverse weather conditions in Singapore's major import sources could reduce agricultural output and drive up the cost of imported food. The statement also flagged that prices for more imported goods and services are expected to continue climbing in the coming months, reinforcing the outlook for sustained inflationary pressure.
The central bank, which surprised markets with a monetary policy tightening in July, had already warned that rising costs for fuel and electronic components would likely intensify imported inflation over the next few quarters. Core inflation, a key gauge monitored by policymakers, advanced to 2.0% in July, slightly below the market's projection of 2.2%.
In response to the economic shockwaves from the Iran conflict, the government has rolled out a relief package worth approximately SGD 2 billion. This includes cash payouts and vouchers for residents, as well as tax rebates for businesses. The inflation data arrives as Singapore sharply revised its GDP growth forecast for 2026, lifting the full-year expansion target to 4.5%-5.5%—nearly double the lower end of the previous 2%-4% range—largely buoyed by artificial intelligence-related industries driving economic momentum.
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