Singapore core inflation picks up to 2.2% in August on higher services, retail and food costs

In August, Singapore's core inflation climbed to 2.2% from 2% in the previous month, driven by price increases in services, retail, and food sectors, according to data released on September 23. This rise in prices matched the median prediction from a Bloomberg poll. Headline inflation, which includes accommodation and private transport, climbed to 2.3% in August, up from 2.2% in the prior month.

Higher global energy costs have resulted in increased electricity and gas tariffs and transport fares, as per statements from Singapore's Monetary Authority and Ministry of Trade and Industry. Electricity and gas prices surged by 8.7% year-on-year in August, mirroring the increase from July, while food service expenses contributed to a 2.3% rise in food inflation from 2.2% in July.

Retail and other goods saw prices jump by 1.8% in August, compared to 1.4% in July, driven by pricier clothing, shoes, and personal care items. In the services sector, prices increased by 2% year-on-year in August, compared to 1.7% in July, with faster hikes in airline and point-to-point transport fees. Accommodation prices remained steady at 0.8% in August, unchanged from July, as housing rents continued to rise at a consistent pace.

Private transport costs cooled to 7.5% in August, down from 8% in July, as car prices saw a smaller increase. Both core and headline inflation are expected to hover between 1.5 and 2.5% for the year, with core inflation anticipated to remain elevated "before moderating more noticeably from around mid-2027," as forecasted by MAS and MTI.

Inflation rates in other Southeast Asian countries also exceeded expectations, with Malaysia experiencing 1.9% year-on-year price growth, Thailand at 2.5%, Indonesia at 3.2%, and Vietnam at 4.9%. Despite these higher oil prices, local economists noted that fuel subsidies and price controls have limited their impact on consumer prices in the region, despite transferring costs to fiscal balances and external accounts.