Singapore Inflation Hits Highest Level, Here's the Culprit
Singapore’s inflation rose to its highest level in nearly two years in July 2026, although the actual figure was still slightly below economists’ expectations. The rise in global energy prices due to the Iran war was one of the factors driving up electricity costs and several transport fares in the city-state.
Singapore government data on Monday (24/8/2026) showed the consumer price index rose 2.2% year-on-year (yoy) in July. The figure was higher than the 1.9% increase in June, but still below the 2.3% expected by economists surveyed by Reuters.
On a monthly basis, the consumer price index actually experienced deflation of 0.2%.
The rise in inflation occurred as global energy prices remained at high levels. These conditions then impacted electricity and gas costs in Singapore, while also driving up transport fares.
The Monetary Authority of Singapore (MAS) together with Singapore’s Ministry of Trade and Industry (MTI) said the rise in global energy costs had driven increases in electricity and gas tariffs as well as transport costs.
“Global oil prices remain high and volatile, while adverse weather conditions are expected to reduce agricultural output and raise prices of Singapore’s imported food,” said a joint statement from MAS and MTI, as quoted by CNBC International.
The two institutions also expect prices of other imported goods and services to increase going forward.
Price pressures were also visible in Singapore’s core inflation. This indicator excludes private transport and accommodation prices. Core inflation was recorded at 2%, lower than economists’ projection of 2.2%.
Nevertheless, the inflation development is noteworthy because Singapore had previously taken a surprising step in its monetary policy.
MAS in July decided to tighten monetary policy, while warning that inflation originating from imported goods could potentially increase in the coming quarters.
The warning relates to rising fuel costs as well as electronic inputs that could increase pressure on prices in Singapore.
The impact of the Iran war on Singapore’s economy has also prompted the government to issue support measures for the public and businesses.
Singapore previously launched two aid packages in response to the impact of the Iran war. The total value of the two packages reached around S$2 billion.
The assistance includes cash handouts to the public, consumption vouchers for households, and tax rebates or relief for companies.
The measures were provided as cost-of-living pressures increased due to rising energy and imported goods prices.
The latest inflation data also coincided with a sharp increase in Singapore’s economic growth projection for 2026.
The Singapore government now expects the country’s economy to grow 4.5%-5.5% throughout 2026.
The projection is far higher than the lower bound of the previous estimate, which was in the range of 2%-4%. Thus, the lower bound of the latest growth projection is more than double the previous lower bound.
The increase in the growth projection comes amid strong economic activity in Singapore, including a boost from industrial developments related to artificial intelligence (AI).