Singapore's core inflation rises to nearly two-year high of 2.2% in August

SINGAPORE: Singapore’s core inflation rose to 2.2 per cent year-on-year in August, up from 2 per cent in July, according to official data released on Wednesday (Sep 23). 

The figure is the highest since September 2024. 

This was driven by higher inflation for services, retail and other goods and food, the Monetary Authority of Singapore (MAS) and Ministry of Trade and Industry (MTI) said in a joint media release.

On a month-on-month basis, core prices - which exclude accommodation and private transport – increased by 0.3 per cent in August. 

Overall inflation, as measured by the Consumer Price Index-All Items, increased to 2.3 per cent in August from 2.2 per cent in July, due to higher core inflation which more than offset lower private transport inflation. 

On a month-on-month basis, overall inflation - which excludes non-consumption expenditures such as purchases of houses, shares and other financial assets and income taxes – increased by 0.6 per cent in August.

SECTORS

Official data released on Wednesday showed that services inflation rose to 2 per cent in August from 1.7 per cent in July as airfares and prices of point-to-point transport services increased at a faster pace.

Retail and other goods inflation increased to 1.8 per cent in August from 1.4 per cent in July due to higher inflation in clothing, footwear and personal care products.

Food inflation also edged up to 2.3 per cent in August from 2.2 per cent in July, reflecting higher food services inflation even as non-cooked food inflation moderated.

Accommodation inflation was unchanged at 0.8 per cent, with housing rents increasing at the same pace in both August and July.

Electricity and gas inflation was also unchanged at 8.7 per cent as prices rose at a similar pace in both August and July.

MAS and MTI noted that the regulated electricity tariff for each quarter is set based largely on the average natural gas prices in the first two and a half months of the preceding quarter, among other factors.

“The increase in the regulated electricity tariff in the third quarter of 2026 is thus the result of the spike in global energy prices over the period of April to mid-June 2026,” the authorities said.

Private transport inflation eased to 7.5 per cent in August from 8 per cent in July due to a smaller increase in car prices.

OUTLOOK

The authorities noted that elevated global energy prices led to increases in Singapore’s electricity and gas tariffs and higher transportation fares.

“Global oil prices remain high and volatile, while adverse weather conditions are expected to lower agricultural yields and raise Singapore’s imported food prices,” said MAS and MTI.

The prices of a wider range of Singapore’s imported goods and services are expected to pick up in the coming quarters as higher input costs pass through global supply chains, the ministries added.

On the domestic front, services unit labour costs are likely to rise at a slower pace amid sustained productivity growth and moderating nominal wage growth.

Enhanced government subsidies will also continue to have a dampening effect on services inflation, the authorities said.

Taking into account these factors, core inflation and overall inflation are expected to average 1.5 per cent to 2.5 per cent in 2026, in line with MAS' full-year forecast range.

Core inflation is expected to remain elevated into 2027 before moderating more discernibly from around mid-2027, alongside the expected easing in global energy prices.

“At this juncture, the risks to the inflation outlook remain tilted to the upside. Renewed disruptions in global energy supplies or worse-than-expected weather conditions could raise Singapore’s imported costs by more than anticipated,” said MAS and MTI.

Inflation could also be more persistent than projected if robust IT investment growth generates stronger demand spillovers globally and in Singapore, the authorities added.

“However, downside risks remain. An unexpected tightening in global financial conditions or a pullback in AI-related investment could lead to a slowdown in economic activity and, in turn, lower inflation.”