RHB has maintained its full-year forecast for Singapore’s headline and core inflation at 2.5% and 2.0%, respectively, for 2026. This comes amidst a manageable year-to-date headline Consumer Price Index (CPI) of 1.7% and a core CPI of 1.5%. However, the financial institution warns of emerging inflationary pressures in the second half of 2026 (2H26), driven by persistent domestic cost pressures and increasing imported costs.
July’s core inflation in Singapore rose to 2.0% year-on-year, up from 1.6% in June, indicating potential upside risks. Headline inflation also increased to 2.2% year-on-year in July, slightly below RHB’s projection of 2.3% and Bloomberg’s consensus estimate of 2.4%.
RHB expects the Monetary Authority of Singapore (MAS) to respond by tightening monetary policy further in 2H26. The Singapore Dollar Nominal Effective Exchange Rate (S$NEER) appreciation gradient is anticipated to rise to 1.50%, with a possibility of further steepening to 1.75% by the end of the year.
Barnabas Gan, RHB’s Group Chief Economist and Head of Market Research, noted the importance of monitoring these inflationary trends closely. The adjustments in monetary policy are seen as necessary to manage the emerging risks and maintain economic stability in Singapore. As the year progresses, the focus will remain on how these pressures evolve and the subsequent actions by MAS.
