Singapore inflation hits highest in nearly two years, but undershoots expectations

Singapore inflation missed estimates even as it accelerated to a near two-year high in July, as higher energy prices due to the Iran war lifted electricity prices.

The city-state reported that consumer prices last month rose 2.2%, year on year, compared with the 2.3% expected by economists polled by Reuters, and the 1.9% rise seen in June.

The consumer price index fell 0.2% on a month-on-month basis. Elevated global energy prices have led to a rise in Singapore's electricity and gas charges, as well as higher transportation fares, according to a joint release by the Monetary Authority of Singapore and the Ministry of Trade and Industry.

"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.

The MAS had tightened its monetary policy in a surprise move in July, warning last month that imported inflation was likely to rise in the coming quarters due to higher fuel and electronic input costs.

Core inflation, which strips out prices of private transport and accommodation, rose to 2% compared to the 2.2% forecast.

Singapore had rolled out two support packages for the country in response to the Iran war, totaling about 2 billion Singapore dollars, with cash handouts, consumption vouchers for households, and tax rebates for companies.

The inflation data also comes as the city-state upgraded its GDP forecast sharply for the full year 2026, with growth now expected to come in at 4.5% to 5.5%, more than double the lower-end of its previous forecast of 2%-4%.