Higher energy, food costs cloud Singapore inflation outlook

Food prices could face further upside risks from adverse weather.

Singapore’s inflation pressures are expected to remain elevated in the coming months as higher energy and imported costs feed through to consumer prices, whilst adverse weather could add to food inflation risks, according to analysts.

RHB expects inflationary pressures to build in the second half of 2026, citing persistent domestic cost pressures and rising imported costs. It maintained its 2026 headline and core inflation forecasts at 2.5% and 2.0%, respectively.

The Monetary Authority of Singapore is also expected to tighten policy further in the second half of 2026, raising the S$NEER appreciation gradient to 1.50%, with risks tilted towards a further steepening to 1.75% by year-end, RHB added.

Nomura similarly expects core inflation to continue broadening in the coming months, driven in part by items sensitive to energy costs and demand. It expects core inflation to average 2.1% in 2026 and approach 3% in the next few months.

Elevated Brent crude oil prices, which were above US$90 a barrel, also pose an upside risk to its inflation outlook. Nomura said electricity and gas inflation rose to 6.1% year on year in July from -2.0% in June after higher tariffs. Services inflation also increased to 1.7% from 1.5%, reflecting higher food services and airfares.

At the same time, its measure of core-core inflation, which excludes raw food and energy, moderated slightly to 1.2% from 1.3%. However, Nomura expects broader price pressures to emerge in the coming months.

UOB also expects higher energy and imported costs to continue transmitting into the broader consumer price basket, although at a measured pace.

Beyond energy, it flagged food inflation as a further upside risk, with adverse weather conditions potentially affecting agricultural yields and raising Singapore’s imported food costs.

UOB expects core inflation to peak at 2.2% year on year in August and September before temporarily easing below 2% in the fourth quarter due to base effects.

It lowered its 2026 core inflation forecast to 1.7% from 1.9% and its headline inflation forecast to 2.0% from 2.2%.

UOB said further MAS tightening would require a higher inflation outlook, although it did not rule out further tightening if food inflation accelerates because of weather-related supply pressures.

CGS identified elevated global energy prices as the key near-term upside risk to inflation. Higher gas and oil prices could feed through to electricity tariffs, fuel prices and transport costs.

The bank also flagged food prices as a risk, with adverse weather conditions, including potential El Niño-related disruptions, potentially affecting crop production in Singapore’s key food-importing partners and raising imported food costs.

CGS expects underlying inflation to remain relatively contained unless external price shocks become prolonged. It maintained its 2026 headline inflation forecast at 2.0%, within MAS’ projected range of 1.5% to 2.5%.

Singapore’s headline inflation rose to 2.2% year on year in July from 1.9% in June, whilst core inflation accelerated to 2.0% from 1.6%. The increase in core inflation was led by higher electricity and gas, services and food inflation.