Singapore’s core inflation rises to 2% in July on higher electricity and gas, services, food prices

SINGAPORE: Singapore’s core inflation rose to 2 per cent year-on-year in July, up from 1.6 per cent in June, according to official figures released on Monday (Aug 24). This was because of higher inflation for electricity and gas, services, and food, the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) said in a joint media release. Core prices, excluding accommodation and private transport, rose by 0.3 per cent month-on-month in July. Overall inflation, as measured by the Consumer Price Index-All Items, rose to 2.2 per cent in July from 1.9 per cent in June, due to higher accommodation inflation alongside higher core inflation. On a month-on-month basis, overall inflation—excluding non-consumption expenditures such as purchases of houses, shares, and other financial assets and income taxes—fell by 0.2 per cent in July. Inflation by sector showed electricity and gas inflation reversing a decline of 2.9 per cent in June to rise to 8.7 per cent in July, mainly due to a sharp increase in electricity prices. Services inflation rose to 1.7 per cent in July from 1.5 per cent the previous month as airfares and point-to-point transport services prices increased faster. Food inflation edged up from 2.1 per cent in June to 2.2 per cent in July due to higher prices for food services and non-cooked food. Accommodation inflation picked up to 0.8 per cent from 0.6 per cent in June, driven by larger increases in housing rents and maintenance fees. Private transport inflation slowed from 8.4 per cent in June to 8 per cent in July as petrol and diesel prices moderated. Elevated global energy prices led to increases in Singapore’s electricity and gas tariffs, as well as higher transportation fares. Persistent high and volatile global oil prices, coupled with adverse weather conditions, are expected to lower agricultural yields and raise Singapore’s imported food prices. MAS and MTI noted that as higher input costs pass through global supply chains, the prices of a wider range of Singapore’s imported goods and services are expected to rise in the coming quarters. Domestic unit labour costs in the services sector are likely to rise at a slower pace due to sustained productivity growth and moderating nominal wage growth, while government subsidies will continue to dampen services inflation. Core inflation and overall inflation are projected to average 1.5 per cent to 2.5 per cent for the whole of 2026, aligning with MAS’ full-year forecast range. Core inflation is expected to remain elevated into 2027 before moderating more noticeably from mid-year, alongside easing global energy prices. The risks to the inflation outlook remain tilted to the upside, with renewed disruptions in global energy supplies or worse-than-expected weather conditions potentially raising Singapore’s imported costs. Inflation could also persist if robust IT investment growth generates stronger demand spillovers globally and in Singapore. However, downside risks include an unexpected tightening in global financial conditions or a pullback in AI-related investment, which could slow economic activity and lower inflation.