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

Singapore's core inflation spiked to a nearly two-year high in July, primarily due to increased utility bills resulting from record-high electricity and gas tariffs. According to the Singapore Department of Statistics, core inflation accelerated to 2% year-over-year, marking the fastest pace since October 2024. However, this was slightly below the median forecast of 2.2% from a Bloomberg survey.

The nation, which imports nearly all of its energy, had to raise tariffs to a record high for the third quarter to combat the surge in energy prices, driven by ongoing Middle Eastern conflicts. Despite this, the all-items inflation rate remained at 2.2%, slightly lower than the estimated 2.4%. Transport and food inflation also increased, with transport inflation at 7.9% and food inflation rising to 2.2%.

Prime Minister Lawrence Wong warned of economic repercussions from the Middle East crisis during his National Day rally, emphasizing the strain on energy, food, and other critical supplies. The government has provided nearly S$2 billion in support since the US-Iran war began earlier this year and further tightened monetary policy last month.

While the Monetary Authority of Singapore maintained its core inflation forecast for 2025 at 1.5%-2.5%, it cautioned that price pressures may persist until mid-2027. Singapore's economy, however, has shown resilience amid the conflict, with the government recently forecasting growth of 4.5%-5.5% for 2026, driven by the AI boom's impact on trade and manufacturing.