Singapore Core Inflation Rises to 2% in July as Electricity and Gas Prices Surge 8.7%

Core inflation, which excludes accommodation and private transport, rose to 2 per cent in July from June’s 1.6 per cent, the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) said on Monday, 24 August. That was the fastest pace since October 2024 according to SingStat data, though it came in below the median estimate of 2.2 per cent predicted by private sector economists in a Bloomberg poll.

Electricity and gas prices reversed a 2.9 per cent decline in June to rise 8.7 per cent in July, mainly due to the increase in the regulated electricity tariff in July. “Elevated global energy prices have led to increases in Singapore’s electricity and gas tariffs and higher transportation fares,” MAS and MTI said in a joint statement on 24 August.

Barclays’ estimates suggest that the 17 per cent adjustment in electricity tariffs accounted for 0.3 percentage point of the increase, said Brian Tan, its head of non-China EM Asia economics research. Its spillover to the rest of the consumer price index basket looks modest, he noted, adding that there were also offsetting sources of disinflation, particularly in communications.

Inflation trends across CPI categories were mixed. Electricity and gas prices reversed the decline in June to post a large increase, and services, accommodation and food inflation rose. However, retail and other goods, as well as private transport inflation, eased.

Food inflation edged up to 2.2 per cent in July, from 2.1 per cent in June, because the prices of food services and non-cooked food increased at a faster pace. Services inflation rose to 1.7 per cent in July, from 1.5 per cent in June, as airfares and point-to-point transport services prices increased at a quicker pace.

Higher housing rents and maintenance fees pushed accommodation inflation to 0.8 per cent in July, from 0.6 per cent in June. Private transport inflation slowed to 8 per cent in July, from 8.4 per cent in June, as the pace of increase in petrol and diesel prices moderated. Retail and other goods inflation eased to 1.4 per cent in July, from 1.7 per cent in June, due to lower inflation in furniture and personal care products.

On a month-on-month basis, the core CPI was up 0.3 per cent, while the all-items CPI fell 0.2 per cent.

MAS and MTI maintained their 2026 full-year forecast range for both core and headline inflation at 1.5 to 2.5 per cent, made in April.

“The build-up in underlying price pressures likely validated MAS’ decision to very slightly increase the appreciation pace of its currency policy band during its July review, although actual inflation readings undershot estimates,” explained DBS senior economist Chua Han Teng.

Standard Chartered chief economist Edward Lee and senior economist Jonathan Koh noted that the inflation statement was “notably more hawkish versus the June CPI statement”. They added: “That said, the gist of the July inflation statement was largely aligned with the July monetary policy statement.” Lee, who is also head of foreign exchange for ASEAN and South Asia, noted that while inflation rose in July, the increase was “smaller than expected”. He said the latest data does not alter Standard Chartered’s expectation of an October policy hold, although there remains a risk of a “very modest further tightening”.

Bank of America economists Ang Kai Wei and Rahul Bajoria said: “While discussions on the medium-term trajectory had already appeared in the July MPS, MAS does not typically comment on inflation dynamics beyond the following calendar year in its CPI outlook publications at this stage of the year.” They believe this points to MAS staying vigilant to upside inflation risks, even as core inflation could come in below its forecasts from July.

For now, the BOA economists tentatively see the central bank steepening the policy slope “very slightly” by 25 basis points in October. Most other watchers think that MAS will leave its monetary policy settings unchanged.

Barclays’ Tan said: “The uncertainty over whether the output gap is exerting the same degree of inflation pressures as before likely restrained the MAS from a fuller 50 basis points increase on 27 July, which suggested to us that more inflation undershoots will likely further raise doubts over how much monetary policy tightening is needed.” Its base case is for MAS to hold off on further tightening, even if economic growth continues to outperform. He added that though the risk remains, the likelihood of another increase in the slope in October has fallen, given that core inflation is not rising as much as feared, and any tightening move is likely to be in the form of another 25 basis points adjustment.

Zavier Wong, market analyst at trading platform eToro, noted that the higher electricity tariff since July was benchmarked against gas prices from April to mid-June, when disruptions in the Strait of Hormuz had sent energy prices higher. “That tariff hike is the steepest quarterly rise we’ve seen in years, which begs the question of whether households have enough room to absorb it,” he added.

“MAS will have to weigh that against how much further it can tighten monetary policy without choking off consumption altogether,” he said. Wong said that core inflation is now around the middle of the full-year forecast range, although risks remain skewed to the upside. “I don’t think July will mark the peak, although the next electricity tariff reset should reflect calmer gas prices, which should ease some of that pressure,” he said.

“At the same time, the renewed US naval blockade of the Strait of Hormuz and ongoing escalation have put fresh cost pressures back on the table even before that relief arrives,” he said. “The key question is whether these pressures feed through in time for MAS’ October review, or only after it.”