Singapore’s core inflation surges to near two-year high on energy

Singapore's core inflation surged to a nearly two-year high in July, primarily due to elevated utility bills following record-high electricity and gas tariffs. Core inflation, excluding housing and private transportation costs, accelerated to 2% year-on-year from the previous year, marking the fastest pace since October 2024, according to the Singapore Department of Statistics.

This figure fell slightly short of the 2.2% median estimate from a Bloomberg survey. The all-items inflation rate stood at 2.2%, slightly lower than the 2.4% estimated by Bloomberg. The surge in core inflation was driven by soaring utility and fuel prices, which rose 6.1% year-on-year amid the ongoing Middle East conflict. Singapore, reliant on imports for nearly all its energy needs, had to increase its electricity and gas tariffs to a record high for the third consecutive quarter.

Transport and food inflation also remained elevated at 7.9% and 2.2%, respectively. Prime Minister Lawrence Wong, in his National Day rally address, cautioned about the economic fallout from the Middle East crisis, highlighting disruptions in shipping through the Strait of Hormuz and the ensuing vulnerability in energy, food, and other critical supplies.

The government has already provided nearly S$2 billion in support since the start of the US-Iran war this year. The Monetary Authority of Singapore tightened policy again last month, maintaining its forecast for core inflation at 1.5%-2.5% for the year. While acknowledging the economic impact of the conflict, the central bank warned that price pressures are likely to remain elevated until mid-2027.

Notably, Singapore's economy has demonstrated resilience despite the inflationary pressure, with the government recently raising its 2026 growth forecast to 4.5%-5.5%, buoyed by the AI boom's impact on trade and manufacturing.