Singapore’s inflation rate continued to decelerate in July, with the Consumer Price Index (CPI) increasing by just 0.6% year-on-year, according to UOB Global Economics and Markets Research. This marks the slowest inflation pace since January 2021, when it was 0.2%. Core inflation, which excludes private road transport and accommodation, rose by 0.5% year-on-year, matching its slowest pace since March this year.
The July headline inflation figure came in below both Bloomberg’s consensus and UOB’s forecast of 0.8%. On a month-on-month basis, headline inflation declined by 0.4%, whilst core inflation edged down by 0.1%.
Several components of the core CPI experienced sharper year-on-year declines, notably in information and communication, which fell by 2.6%, and household durables and services, which decreased by 0.5%. Clothing and footwear resumed its deflationary trend with a 2.3% drop after a brief rebound in June. However, the recreation, sport, and culture sector saw a smaller decline due to improved demand for leisure travel.
Despite a slight increase in private transport prices, headline inflation eased, offset by slower accommodation inflation and a significant reduction in housing maintenance and repair costs. Food inflation saw a slight uptick to 1.1% due to incremental price increases in non-cooked food and food serving services.
UOB maintains its average core inflation forecast for 2025 at 0.6% and 1.1% for 2026, with headline CPI forecasts unchanged at 0.9% for 2025 and 1.6% for 2026, though there is a risk of undershooting the 2025 headline forecast.
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