The consumer inflation of Singapore slowed sharply in July, easing to 0.6% year-on-year - its lowest level since January 2021 - as falling energy prices and subdued demand weighed on costs.
The figure came in below the 0.7% median forecast in a Reuters poll and was down from June’s 0.8%, signalling that price pressures in the city-state are cooling faster than anticipated.
Core inflation — which excludes private transport and accommodation — slipped to 0.5%, undershooting expectations of 0.6%.
According to the Monetary Authority of Singapore (MAS), the decline was driven largely by lower electricity and gas prices, alongside softer retail goods inflation. Prices of electricity and gas tumbled 5.6% from a year earlier, the steepest fall across all components of the CPI basket. In contrast, private transport costs rose 2.1% on the back of higher car prices.
MAS said overall inflation should stay “moderate” in the near term, supported by easing global oil prices and stable food commodity costs. “Domestically, slower nominal wage growth and productivity increases should contribute to a moderation in unit labour costs,” the central bank added.
The authority’s latest annual report projected core inflation to average between 0.5% and 1.5% in 2025, sharply lower than 2024’s 2.8%.
“Imported goods inflation facing Singapore should be modest against the backdrop of slowing global demand,” MAS noted.
The central bank has already loosened policy twice this year, in January and April, to counter sluggish growth. At its July meeting, however, it opted to keep its monetary settings unchanged, warning of a “downshift” in the global trade environment and rising geopolitical tensions.
DBS senior economist Chua Han Teng said the MAS decision reflected caution amid “significant external uncertainties” and expectations of only “modest” cost pressures ahead. “Preserving its ammunition to respond to any unexpected shocks was likely the reason MAS stayed put in July,” Chua explained.
But market analysts see a growing case for another policy easing in October. “Inflation is no longer the obstacle it once was,” Josh Gilbert, market analyst at eToro told CNBC. “The MAS will find it increasingly difficult to justify sitting on its hands if growth weakens further.”
Singapore’s economy expanded strongly in the first half of 2025, but the central bank forecasts slower growth in the coming months, citing trade frictions and tariff risks. The city-state continues to face a baseline 10% tariff on its exports to the U.S., imposed by the Trump administration despite an existing free trade agreement.
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