Core inflation rises to 2% in July; electricity prices rise sharply

[SINGAPORE] Core and headline inflation picked up in July, with the core figure rising largely due to electricity and gas, services and food segments, the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) said on Monday (Aug 24).

Core inflation, which excludes accommodation and private transport, rose to 2 per cent in July from June’s 1.6 per cent. Still, it was below the median 2.2 per cent predicted in Bloomberg’s poll of private sector economists.

Meanwhile, headline inflation picked up to 2.2 per cent in July from the preceding month’s 1.9 per cent, driven by an increase in accommodation inflation alongside higher core inflation. The headline figure also came in under the median economists estimate of 2.4 per cent.

On a month-on-month basis, the core consumer price index (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. But the wording of their outlook statement changed significantly from the previous month.

“Elevated global energy prices have led to increases in Singapore’s electricity and gas tariffs and higher transportation fares,” they noted, compared with previous mentions of higher energy costs expected to pass through global supply chains with a lag.

“Global oil prices remain high and volatile while adverse weather conditions are expected to lower agricultural yields and raise Singapore’s imported food prices,” they added.

“As higher input costs pass through global supply chains, the prices of a wider range of Singapore’s imported goods and services are expected to pick up in the quarters ahead.”

MAS and MTI maintained that the risks to inflation remain tilted to the upside.

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They noted that “renewed disruptions in global energy supplies or worse-than-expected weather conditions” could raise imported costs "by more than anticipated”, compared with just “could further raise imported costs for Singapore” in the previous report.

Then, they had flagged “a slower-than-expected resumption in global energy supplies or continued shortages in key intermediate inputs to regional supply chains” as factors that could lead to the increase.

On the other hand, for downside risks, the authorities now say that a pullback in artificial intelligence-related investment could cause a slowdown in economic activity and lower inflation, which was not mentioned before.

They also highlighted an “unexpected tightening in global financial conditions” as a potential downside risk, compared with the “stronger-than-expected tightening” discussed last month.

Key CPI categories

In July, inflation trends across CPI categories were mixed.

Electricity and gas prices reversed the decline in June (-2.9 per cent) to post a large increase (8.7 per cent), mainly reflecting a sharp rise in electricity prices.

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.

Accommodation inflation picked up to 0.8 per cent from 0.6 per cent due to larger increases in housing rents and maintenance fees.

Food inflation edged up to 2.2 per cent from June’s 2.1 per cent as the prices of food services and non-cooked food increased at a faster pace.

In contrast, retail and other goods inflation eased to 1.4 per cent in July from 1.7 per cent previously, due to lower inflation in furniture and personal care products.

Private transport inflation slowed to 8 per cent, from 8.4 per cent, as the pace of increase in petrol and diesel prices moderated.