Singapore’s inflation accelerated to its highest level in nearly two years in July, driven by soaring energy prices linked to the Iran war, but the reading still fell short of what economists had expected.
Consumer prices rose 2.2% year on year last month, according to a joint release from the Monetary Authority of Singapore and the Ministry of Trade and Industry. That compared with the 2.3% forecast in a Reuters poll of economists and the 1.9% increase recorded in June. On a month-on-month basis, the consumer price index slipped 0.2%.
The pickup was largely attributed to elevated global energy prices, which pushed up electricity and gas charges in the city-state, as well as transportation fares. The authorities also flagged looming pressure on food costs, warning that adverse weather conditions are expected to lower agricultural yields and raise Singapore’s imported food prices.
“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 excludes private transport and accommodation costs, rose to 2% in July — below the 2.2% that economists had projected.
The data come on the heels of a surprise monetary policy tightening by the MAS in July. At the time, the central bank warned that imported inflation was likely to rise in the coming quarters due to higher fuel and electronic input costs.
Government support and GDP upgrade
In response to the economic fallout from the Iran war, Singapore has rolled out two support packages totaling about 2 billion Singapore dollars. These include cash handouts, consumption vouchers for households, and tax rebates for companies.
The inflation release also coincides with a sharply upgraded growth outlook for the city-state. The government now expects full-year 2026 GDP growth of 4.5% to 5.5% — more than double the lower end of its previous forecast range of 2% to 4%.
The combination of still-elevated inflation and stronger growth prospects presents a delicate balancing act for policymakers, who must weigh the need to contain price pressures against supporting an economy that is rebounding faster than anticipated.
Source: www.cnbc.com — https://www.cnbc.com/2026/08/24/singapore-inflation-budget-iran-war.html
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