Singapore's Core Inflation Rises to 1.6% in June Amid Rising Energy Costs

Singapore, Singapore Jul 23, 2026 ALN: SINGAPORE - Singapore’s core inflation edged up in June, with higher energy costs expected to raise production and transport costs for a wider range of the country’s imported goods and services over time. This increase in core inflation is significant as it reflects underlying price pressures in the economy, excluding the often volatile categories of private transport and accommodation. As a result, it provides a clearer picture of the inflationary trends affecting households.

Core inflation – which excludes private transport and accommodation to better reflect household expenses – came in at 1.6 per cent in June, up from 1.4 per cent in May. This gradual rise indicates that while inflationary pressures are building, they are not yet at alarming levels. Economists polled by Bloomberg had forecast that core inflation would rise to 1.7 per cent, suggesting that the actual figures fell slightly short of expectations, which can have implications for monetary policy decisions by the Monetary Authority of Singapore (MAS).

Overall inflation was recorded at 1.9 per cent in June, which is a slight increase from 1.8 per cent in May. This overall rise is attributed not only to the increase in core inflation but also to higher accommodation costs. In a joint release on July 23, the MAS and the Ministry of Trade and Industry (MTI) noted that the inflationary environment is complex and influenced by various global factors. “A slower-than-expected resumption in global energy supplies or continued shortages in key intermediate inputs to regional supply chains could further raise imported costs for Singapore,” said the authorities. This highlights the interconnectedness of global markets and the direct impact that international supply chain disruptions can have on local economies.

However, the authorities also pointed out that there are downside risks present. A stronger-than-expected tightening in global financial conditions could lead to a slowdown in economic activity and thus lower inflation. This duality of risk suggests that while inflationary pressures are present, there are also factors that could mitigate these pressures in the future, potentially leading to a stabilization of prices.

For now, private transport inflation dipped slightly from 8.6 per cent in May to 8.4 per cent in June due to a smaller increase in petrol prices. This is noteworthy as fuel prices are a significant contributor to overall inflation, particularly in a city-state like Singapore where private transport is heavily utilized. The moderation in transport costs may provide some relief to consumers who have been facing rising expenses across multiple categories.

Food inflation also saw an increase, rising by 0.3 percentage points to 2.1 per cent in June, up from 1.8 per cent in May. This increase is attributed to faster price rises in both non-cooked food and food services, reflecting broader trends in global food prices and supply chain issues. Given that food is a staple expenditure for households, this rise in food inflation could lead to increased concerns among consumers regarding their cost of living.

Furthermore, retail and other goods inflation crept up to 1.7 per cent in June, from 1.6 per cent in May. This increase is indicative of larger price increases in furniture and other recreational goods, which may be reflective of changing consumer behavior as people adapt to post-pandemic life and invest in home improvements or leisure activities.

Higher housing rents have pushed accommodation inflation to 0.6 per cent in June, up from 0.5 per cent in May. This increase in accommodation costs is particularly relevant in Singapore, where housing is a significant part of household expenditure. The steady rise in rental prices may be linked to demand pressures in the housing market, exacerbated by limited supply and increasing population density in urban areas. The tight housing market in Singapore has been a longstanding issue, with many residents feeling the pinch of rising rents, which can significantly affect their disposable income and overall quality of life.

Services inflation also rose to 1.5 per cent in June, compared with 1.3 per cent in May, driven by larger increases in airfares and holiday expenses. This rise reflects a rebound in consumer spending on travel and leisure activities as restrictions related to the COVID-19 pandemic continue to ease, resulting in pent-up demand. The revival of the tourism sector is crucial for Singapore's economy, as it has traditionally been a significant contributor to GDP. As international travel resumes, the demand for travel-related services is expected to increase, potentially putting further upward pressure on prices in this sector.

Interestingly, electricity and gas prices fell by 2.9 per cent in June, compared with a 3 per cent decrease in May. This decline is attributed to a smaller drop in electricity prices, which is significant given the role of energy costs in overall inflation. Regulated electricity tariffs for each quarter are set based on the average natural gas prices in the first 2½ months of the preceding quarter, among other factors. Therefore, higher global energy prices over the period of April to mid-June 2026 will only be reflected in the regulated electricity tariff in the third quarter of 2026, starting from July. This lag in price adjustments can have implications for consumers and businesses alike as they plan their budgets and expenditures. Businesses, in particular, may face challenges in managing their operational costs if energy prices rise sharply in the near future.

The dynamics of inflation in Singapore are not only a reflection of local economic conditions but are also influenced by global trends. The ongoing geopolitical tensions, supply chain disruptions, and fluctuations in commodity prices are all factors that can impact inflation in the city-state. For instance, the conflict in Eastern Europe has led to disruptions in the supply of energy resources, which can have a cascading effect on economies worldwide. Additionally, the COVID-19 pandemic continues to create uncertainties in global supply chains, leading to delays and increased costs for imported goods. As such, the MAS and MTI will likely continue to monitor these developments closely as they formulate policies to manage inflation and support economic growth.

In conclusion, while Singapore’s core inflation has shown a modest increase, the overall economic outlook remains mixed with both upward and downward pressures on prices. Policymakers will need to navigate these complexities carefully to ensure that inflation remains manageable while supporting the recovery of the economy in the post-pandemic landscape. The implications of these inflationary trends are far-reaching, affecting everything from consumer spending and business investment to monetary policy and economic growth forecasts. As inflation continues to be a key concern for households, the government may also need to consider measures to cushion the impact on vulnerable segments of the population, ensuring that economic growth is inclusive and sustainable for all Singaporeans.