Singapore’s inflation rate in July rose to 2.2% year-on-year, marking its highest level in nearly two years, though it was slightly below economist expectations of 2.3%. This increase reflects a jump from June’s 1.9%, with the consumer price index also declining 0.2% on a month-to-month basis. The rise in inflation has been largely attributed to heightened electricity prices driven by surging global energy costs amid the ongoing Iran war.

The Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry reported that higher energy prices have pushed up electricity and gas charges, as well as transportation fares. Additionally, adverse weather conditions are expected to reduce agricultural yields, which could lead to further increases in imported food prices. These factors point to a continuation of upward pressure on prices for imported goods and services in the near future.

Core inflation, which excludes private transport and accommodation costs, increased to 2% in July, slightly below forecasts of 2.2%. In response to inflationary pressures linked to the Iran conflict, the Singapore government launched two support packages totaling around 2 billion Singapore dollars. These included cash handouts, consumption vouchers for households, and tax rebates for businesses to help mitigate the impact on consumers and firms.

Despite inflation concerns, Singapore’s economy showed resilience with the government raising its GDP growth forecast for 2026 to a range of 4.5% to 5.5%, more than double the previous low-end projection of 2% to 4%. This optimistic outlook reflects strengthening economic activity even as inflation challenges persist, driven partly by higher fuel and electronic input costs influenced by ongoing geopolitical tensions.