Singapore Core Inflation Rises to 2.0 Percent in July

Singapore’s core inflation rose to 2.0% year-on-year in July, accelerating from 1.6% in June but falling short of the 2.2% consensus forecast among economists [1, 2]. The data indicates that while price pressures are building, the pace of the increase remains more contained than market participants had anticipated [1].

Drivers of price momentum

The uptick in core inflation—which excludes accommodation and private transport costs—was largely attributed to rising prices in the electricity, gas, services, and food segments [2]. Electricity and gas costs were significant contributors, with electricity prices climbing 9% and gas prices rising 6% year-on-year [1]. Barclays estimates that a 17% adjustment in electricity tariffs alone accounted for 0.3 percentage points of the total increase in core inflation [2].

Headline inflation also accelerated, reaching 2.2% in July compared to 1.9% in June [1, 2]. Despite these year-on-year gains, underlying price momentum showed signs of cooling, with headline CPI declining 0.2% on a month-on-month basis [1]. The broader increase in costs reflects the pass-through of elevated global energy prices, which continue to impact domestic goods and services, including airfares and food [1].

Policy outlook and risks

The Monetary Authority of Singapore (MAS) remains under pressure as it balances cooling price momentum against persistent upside risks. While the July inflation print undershot expectations, the MAS previously signaled heightened concern regarding inflation by increasing the slope of the Singapore Dollar Nominal Effective Exchange Rate (SGD NEER) policy band in July [1].

Analysts point to several factors that could keep inflation elevated in the coming months. Households are navigating a 17% increase in electricity tariffs scheduled between July and September, and town gas tariffs have risen by 7.1% [1]. Furthermore, the potential for El Niño to disrupt food imports and the sustained demand from Singapore’s AI-related investment and data center activity remain key variables for domestic price stability [1].

What to watch

• October MAS Meeting: Market participants are monitoring the upcoming Monetary Authority of Singapore meeting, where the potential for further modest policy tightening remains a live possibility despite the recent inflation miss [1].
• Energy Pass-through: Watch for the full impact of the 17% electricity tariff adjustment as it continues to filter through the economy in the next few months [1].
• Global Geopolitics: Ongoing uncertainty surrounding the US-Iran conflict remains a primary risk factor that could keep global energy prices elevated and pressure domestic goods prices [1].

Whether the MAS opts for further tightening will depend on how quickly these energy and utility cost adjustments stabilize versus the strength of domestic demand. The central bank’s next move will clarify if they view the July data as a temporary reprieve or a signal to maintain a hawkish stance [1].