Singapore's July Core Inflation Rises to 2.0%, Below Forecast but Highest in Nearly Two Years

Official data shows that Singapore's core inflation rate (excluding private road transport and accommodation costs) rose 2.0% year-on-year in July 2025. Although this figure was below the 2.2% forecast from media surveys, it marked the highest increase since October 2024—nearly two years—driven by soaring global energy prices stemming from Middle East conflicts, which were passed on to households, causing a sharp rise in utility costs.

Additionally, the overall inflation rate in July was 2.2%, also below market expectations of 2.3% to 2.4%.

Breakdown data shows that utility and fuel prices surged 6.1%, primarily due to global energy cost pressures triggered by Middle East conflicts. Moreover, transportation inflation remained high at 7.9%, and food inflation rose to 2.2%.

Singapore's Prime Minister Lawrence Wong warned during the National Day Rally that the Middle East crisis and shipping disruptions in the Strait of Hormuz have impacted key supplies of energy and food, exposing supply chain vulnerabilities. To mitigate external shocks, the Singapore government has disbursed nearly SGD 2 billion in subsidies to citizens since the outbreak of the U.S.-Iran war at the beginning of this year.

To address ongoing inflation risks, the Monetary Authority of Singapore (MAS) unexpectedly tightened monetary policy in late July. MAS maintains its core inflation forecast for the year at 1.5% to 2.5% but warns that price pressures could remain elevated and persist into mid-2027.

Despite facing inflationary pressures, Singapore's economy continues to show strong resilience. Boosted by a 5.9% year-on-year GDP growth in Q2 and the AI boom driving trade and manufacturing growth, the Singapore government has significantly raised its economic growth forecast for the year from the previous 2.0%-4.0% to 4.5%-5.5%.