Singapore’s headline inflation climbed to 2.2% year on year in July, its highest level in nearly two years, though still missing economist expectations.
A Reuters poll of economists had projected headline inflation to reach 2.3%, while June had recorded a more modest 1.9% rise in consumer prices.
The consumer price index slipped 0.2% on a month-on-month basis, adding a note of caution to what was otherwise a sharp annual acceleration.
Higher global energy prices driven by the Iran war pushed electricity and gas charges upward, contributing significantly to the overall inflation reading.
A joint release by the Monetary Authority of Singapore and the Ministry of Trade and Industry cited elevated energy costs and rising transportation fares as key drivers.
“Global oil prices remain high and volatile while adverse weather conditions are expected to lower agricultural yields and raise Singapore’s imported food prices,” the statement said, adding that prices of more imported goods and services are expected to climb moving forward.
Core inflation, which strips out private transport and accommodation costs, rose to 2%, also falling short of the 2.2% forecast by economists.
The Monetary Authority of Singapore had already moved proactively, tightening monetary policy in a surprise decision in July and warning that imported inflation was likely to rise in coming quarters due to higher fuel and electronic input costs.
Singapore has responded to the economic pressures stemming from the Iran war with two support packages totaling approximately 2 billion Singapore dollars, which include cash handouts, consumption vouchers for households, and tax rebates for companies.
The inflation figures arrive alongside an upgraded GDP growth forecast, with Singapore now projecting full-year 2026 growth of 4.5% to 5.5%, more than double the lower end of its previous forecast range of 2% to 4%.
The upgraded growth outlook reflects a degree of economic resilience even as external pressures from global energy markets and supply chain disruptions continue to weigh on consumer prices.
Policymakers will be closely watching incoming data in the months ahead as Singapore navigates the twin challenges of sustaining growth and keeping inflation expectations anchored.
