(July 23): Singapore’s core inflation accelerated last month as higher global energy costs are beginning to filter through to consumer prices.

Core inflation, which excludes housing and private transportation costs, rose to 1.6% in June from a year earlier, according to a statement by the Singapore Department of Statistics on Thursday. That was faster than the 1.4% pace in May but below the median estimate in a Bloomberg News survey of 1.7%.

The all-items inflation rate came in at 1.9%, compared to the 2% survey median estimate.

Food inflation accelerated to 2.1% last month, while larger increases in airfare and holiday expenses pushed services inflation to 1.5%. Transport inflation was up at 7.5%. 

The Singapore dollar was up 0.1% to 1.2894 versus the greenback after the data release.

“Global energy prices remain elevated relative to their levels in 2025,” the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) said in a statement.

“As higher energy costs pass through global supply chains with a lag, they are expected to raise production and transport costs for a wider range of Singapore’s imported goods and services over time.”

The stronger reading suggests recent spikes in global energy prices are starting to feed through, potentially adding pressure on the MAS to further tighten policy at its Monday meeting. 

“Core inflation will likely rise further in the coming months, amid the lagged pass-through of higher energy and imported input costs from Gulf War shocks,” said Brian Lee, economist at Maybank Securities Pte Ltd.

Electricity and gas, for example, still showed a negative 2.9% inflation print in June as tariffs are based on energy costs from the preceding quarter. Rates are set to go up by a record 17% starting July.

Earlier this week, the International Monetary Fund said Singapore’s core inflation is expected to quicken and average 2.5% in the second half of the year. Nevertheless, that remains within the MAS’ 1.5%-2.5% outlook for 2026. The central bank also didn’t signal any need to revise the range, unlike in previous statements.

“It suggests that policymakers will likely still keep parameters unchanged in the upcoming July meeting,” said Barnabas Gan, group chief economist at RHB Bank.

The MAS and MTI reiterated that there are upside risks to the inflation outlook if a slower-than-expected resumption in energy shipments raises input costs for Singapore. But tighter global financial conditions and a slowdown in economic activity could also dampen price pressures.

The global backdrop remains fluid. Energy prices in June had retreated from the highs seen earlier in the Iran war, but Brent oil prices recently rebounded above US$90 per barrel this month as tensions reignited.

Singapore’s economy has remained resilient through the conflict, expanding 5.7% in the second quarter from a year earlier, beating the 5.5% estimate in a Bloomberg News survey on global demand for artificial intelligence-related electronics.

According to Barclays plc, it will be a “close call” on Monday, and there remains a significant risk that the MAS could move to raise the slope of its currency band anew.

“Even if the MAS stands pat on July 27 as per our base case, the tone of the upcoming monetary policy statement is likely to sound relatively hawkish, in our view,” Barclays economist Brian Tan said.

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