Singapore’s core Consumer Price Index (CPI) rose by a modest 0.1% month-on-month in June, translating to a softer-than-expected 1.6% year-on-year increase, as reported by UOB Global Economics and Markets Research. This figure fell short of both Bloomberg’s consensus and UOB’s forecast of 1.7%. Despite the lower headline figure, inflationary pressures are broadening across key categories such as food and recreation, sport, and culture, partly due to holiday effects.
The moderation in core inflation was driven by a decline in the information and communications component, attributed to competitive pricing among telecommunications providers. However, UOB warns of upside risks to inflation forecasts due to rising energy prices amid Middle East tensions and potential increases in food prices from a Super El Niño event. The US National Oceanic and Atmospheric Administration predicts an 81% chance of a “very strong” El Niño developing later this year.
UOB maintains its 2026 headline and core inflation forecasts at 2.2% and 1.9%, respectively, but highlights the potential for these figures to rise. The Monetary Authority of Singapore (MAS) is expected to keep its current monetary policy stance unchanged, although there is a 40% probability of a policy adjustment in the near future to address imported inflation risks.
The report underscores the complexity of Singapore’s inflation landscape, with broader price pressures suggesting a lagged pass-through of earlier energy price shocks. As global conditions evolve, Singapore’s economic outlook remains closely tied to external factors, particularly energy and food prices.
