Core inflation eases in July, but upside and downside risks remain: MAS, MTI

Inflation eased in July, with core inflation falling marginally to 0.5 per cent year-on-year, said the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI).

Core inflation, which excludes private transport and accommodation, declined from 0.6 per cent in June, according to a press release on Monday (Aug 25). 

MAS and MTI said that the change was driven by a fall in the prices of retail and other goods, as well as lower electricity and gas inflation.

Headline inflation eased to 0.6 per cent year-on-year in July from 0.8 per cent in June due to lower accommodation inflation in addition to lower core inflation.

MAS and MTI maintained their 2025 full-year inflation forecast for core and headline inflation at 0.5 to 1.5 per cent, adding that "both upside and downside risks" remain.

Inflation can also be negatively impacted in event of geopolitical shocks causing imported energy and shipping costs to spike, they said.

At the same time, "should global and domestic growth be more hesitant and weaker than anticipated, core inflation could stay low for longer", they added.

Additionally, MAS and MTI expect imported inflation to "remain moderate" in the near term as global crude prices continue to ease and increases in food commodity prices stay contained.

"Although the ongoing trade conflicts could be inflationary for some economies, their impact on Singapore's import prices is likely to be offset by the disinflationary drags exerted by weaker global demand," they said.

MAS and MTI expect slower nominal wage growth and continuing increases in labour productivity to contribute to a moderation in unit labour costs. 

At the same time, enhanced government subsidies for essential services will continue to dampen services inflation, they said.

[[nid:721242]]

dana.leong@asiaone.com