Singapore Core Inflation Hits 2% Amid Energy Crisis

Core inflation in Singapore rose to 2% in July, marking the fastest increase since October 2024. All-items inflation reached 2.2%, driven primarily by surging fuel and utility prices. These increases result from elevated global energy costs and shipping disruptions in the Strait of Hormuz caused by the ongoing US-Iran war, which forced the government to raise electricity and gas tariffs to record highs for the third quarter.

Lawrence Wong, Prime Minister of Singapore, stated that the region is dealing with a "major crisis in the Middle East" that has exposed vulnerabilities in food, energy, and other critical supplies. In response to these pressures, the government deployed nearly S$2 billion in support packages consisting of tax rebates and cash handouts.

The Monetary Authority of Singapore tightened monetary policy in July and warned that price pressures may persist until mid-2027, noting that volatile oil prices and adverse weather are expected to raise imported food costs. Despite these inflationary headwinds, the government upgraded its 2026 GDP growth forecast to 4.5%-5.5%, attributing the optimism to a boost in manufacturing and trade fueled by the artificial intelligence boom.