Singapore Core Inflation Hits Highest Since 2024

Singapore’s core inflation accelerated to 2% year on year in July 2026 from 1.6% in June, reaching its highest level since October 2024. Headline inflation rose to 2.2% from 1.9%. The sharpest shift came from electricity and gas prices, which jumped 8.7% after falling 2.9% in June. Both inflation readings came in below economists’ forecasts, but authorities expect elevated energy costs to keep price pressures higher into 2027.

Singapore core inflation accelerates to 2%

MAS Core Inflation rose 2% year on year in July after increasing 1.6% in June. On a month-on-month basis, core consumer prices gained 0.3%. Headline CPI inflation increased to 2.2% from 1.9%, even as the all-items consumer price index fell 0.2% from June.

The July reading was the highest core inflation rate since October 2024, when it stood at 2.1%. It subsequently declined to 1.9% in November. The latest figure is therefore a near-two-year high rather than a full two-year high.

Inflation nevertheless undershot expectations. The median forecast in Bloomberg’s poll of private-sector economists was 2.2% for core inflation and 2.4% for headline inflation, compared with the actual readings of 2% and 2.2%.

Singapore electricity prices drive the inflation increase

The biggest change occurred in electricity and gas. Prices in the category increased 8.7% from a year earlier after declining 2.9% in June. Authorities attributed the reversal mainly to the sharp increase in the regulated electricity tariff at the start of the third quarter.

The regulated household tariff for July through September increased 17% from the previous quarter, or by 4.64 Singapore cents per kilowatt-hour before Goods and Services Tax, to 31.91 cents per kilowatt-hour. For a family living in a four-room Housing and Development Board flat, the average monthly electricity bill is expected to rise by about S$17.14 before tax.

Singapore’s tariff structure means movements in global fuel prices reach consumers with a delay. The energy-cost component for each quarter is based partly on average natural gas prices during the first two and a half months of the preceding quarter. The July-to-September tariff therefore incorporates the surge in global fuel costs from April 1 through mid-June.

Singapore is particularly exposed to imported energy shocks because about 95% of its electricity is generated using imported natural gas. The Energy Market Authority had warned that disruptions linked to the Middle East conflict would feed through to electricity and town-gas tariffs.

Why energy affects Singapore core inflation

Singapore’s core inflation measure differs from those used in many economies. It excludes accommodation and private road transport rather than food and energy.

Those two excluded components are considered volatile and significantly affected by supply-side administrative policies. Electricity, gas and food remain inside the core basket, meaning higher utility tariffs directly influence the measure used by policymakers to track persistent price pressures.

The accommodation component of headline CPI includes actual housing rents, imputed rentals for owner-occupied homes and maintenance and repair costs. Home purchase prices themselves are excluded from the consumer price index because housing also has a substantial investment component.

Singapore food and services inflation also increases

Energy was the largest driver of the July move but not the only category showing stronger price growth. Services inflation increased to 1.7% from 1.5% as airfares and point-to-point transport service prices rose more quickly.

Food inflation edged up to 2.2% from 2.1%, reflecting faster increases in food services and non-cooked food. Accommodation inflation rose to 0.8% from 0.6% as housing rents and maintenance fees increased at a faster pace.

Other categories softened. Retail and other goods inflation eased to 1.4% from 1.7%, partly because furniture and personal-care prices rose less quickly. Private transport inflation moderated to 8% from 8.4% as the pace of petrol and diesel price increases slowed.

The July acceleration therefore extended beyond utilities, although electricity and gas recorded by far the largest swing.

Singapore had already tightened monetary policy

The acceleration did not come as a surprise to policymakers. Before the July inflation data were released, the Monetary Authority of Singapore had already said core inflation was expected to step up from July and remain elevated into 2027.

On July 27, MAS tightened monetary policy again. Unlike most major central banks, Singapore does not primarily use a benchmark policy interest rate. Instead, it manages the Singapore dollar nominal effective exchange rate against a trade-weighted basket of currencies.

MAS increased the rate of appreciation of its policy band “very slightly” in July, while leaving the width of the band and the level at which it was centred unchanged. The move followed a larger tightening in April and was designed to cap inflationary pressures.

The exchange-rate framework is particularly relevant for a small, open economy that imports most of its fuel, a large share of its food and many intermediate goods. A firmer currency helps limit the domestic impact of increases in imported costs.

Singapore economy grows 6.1% in the first half

Inflation is rising while economic growth remains unexpectedly strong. Singapore’s gross domestic product expanded 5.9% year on year in the second quarter after growing 6.3% in the first. First-half GDP increased 6.1%.

On August 11, the Ministry of Trade and Industry raised its full-year 2026 growth forecast to 4.5–5.5% from 2–4%. It cited stronger-than-expected first-half performance and an acceleration in global artificial-intelligence-related capital expenditure that is supporting electronics, information technology and related services.

Strong economic activity gives policymakers more room to keep monetary conditions restrictive. It can also create additional inflation pressure if investment growth translates into stronger domestic demand.

Authorities explicitly identify that possibility as an upside risk: robust information-technology investment could generate stronger demand spillovers globally and within Singapore and make inflation more persistent than expected.

Singapore inflation could remain elevated into 2027

The official full-year inflation forecasts were left unchanged after the July data. Both MAS Core Inflation and CPI-All Items inflation are projected to average between 1.5% and 2.5% in 2026.

Core inflation is expected to remain elevated into 2027 before moderating more clearly from around the middle of the year, assuming global energy prices ease.

Higher costs could spread to a broader range of imported goods and services over the coming quarters. Elevated oil prices are increasing transportation costs, while adverse weather could reduce agricultural yields in supplier countries and push up Singapore’s imported food prices.

Domestic cost pressures look more contained. Sustained productivity growth and moderating nominal wage increases are expected to slow growth in unit labour costs in services, while enhanced government subsidies should continue to dampen some services inflation.

Singapore inflation risks remain tilted upward

Authorities assess the balance of inflation risks as being tilted to the upside. Renewed disruptions in global energy supply or worse-than-expected weather could raise Singapore’s imported costs by more than currently assumed.

Inflation could also become more persistent if strong IT investment generates greater demand spillovers. Downside risks include an unexpected tightening in global financial conditions or a pullback in AI-related investment, either of which could weaken economic activity and reduce inflation.

The July figures therefore do not indicate a return to Singapore’s 2022–2023 inflation episode. Core inflation remains far below the levels reached during that period, and the 2% reading undershot economists’ forecasts. The more important issue is that much of the current pressure originates abroad, limiting Singapore’s ability to influence the initial shock directly.

As International Investment experts report, Singapore’s rise in core inflation to 2% does not yet amount to a new broad-based inflation surge: the figure remains within the official full-year forecast and came in below market expectations. The larger risk is the further transmission of the energy shock. Sharply higher utility tariffs have already carried the April-to-June increase in gas costs into household and business expenses, while the next round could appear in transport, food and a wider range of imported goods. Strong economic growth gives policymakers room to maintain a firmer exchange-rate stance, but Singapore’s dependence on imported energy means its inflation trajectory will continue to be shaped to a significant degree by developments outside the country.