Singapore: inflation and production outlook – DBS
DBS economists Taimur Baig and Radhika Rao project Singapore’s headline and core inflation will rise in July to 2.4% and 2.3% year-on-year, respectively, driven by higher energy and food costs.
DBS economists Taimur Baig and Radhika Rao anticipate Singapore's headline inflation to climb to 2.4% year-on-year and core inflation to reach 2.3% yoy in July. The rise in inflation is attributed to higher energy and food costs, including a 17% increase in electricity tariffs and firmer food prices. Industrial production growth is expected to accelerate to 9.0% yoy, primarily driven by electronics and precision engineering sectors benefiting from strong global demand for AI-related hardware, despite uneven factory performance due to rising cost pressures and supply chain disruptions.
The central bank's decision to slightly increase the appreciation pace of its currency policy band during its July review was validated by the inflation pressures. Policymakers will likely maintain a cautious, slightly hawkish stance regarding inflation risks in their outlook commentary, given the ongoing Middle East conflicts.
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