Singapore: Inflation and Production Outlook – DBS Bank

DBS Bank economists Taimur Baig and Radhika Rao released an outlook noting that, driven by rising energy and food costs, Singapore's headline Consumer Price Index (CPI) is expected to climb to 2.4% year-on-year in July, while core inflation is projected to reach 2.3%. This forecast reflects that short-term supply-side factors are intensifying price disturbances.

**Cost-side pressures push up short-term inflation**

Looking at the drivers, this round of inflation is mainly attributed to external cost inputs. Energy price fluctuations directly transmit to the transportation and utilities sectors, while rising food prices put pressure on household daily consumption. However, DBS Bank also noted in its recent economic outlook that, as geopolitical tensions in the Middle East ease, the risk premium on global energy prices is declining, which should help alleviate inflationary pressures in the medium to long term and boost business confidence.

**Economic resilience provides a buffer for policy**

Despite the inflation uptick, the resilience of Singapore's economic fundamentals offers room to manage price pressures. DBS Bank previously upgraded its 2026 economic growth forecast for Singapore to 4.3%, citing strong first-half performance and a sustained global artificial intelligence investment cycle. The bank's nowcast model indicates that Singapore's economy retains sufficient momentum entering the second half of the year, with the financial services sector poised to benefit from revived capital market activity, while construction booms in areas such as transportation, hospitality, and public housing will provide additional growth impetus.

**External risks still warrant caution**

However, DBS Bank also highlighted uncertainties in the external environment. The lagged effects of global tariff hikes, downside risks from additional tariffs on the semiconductor industry, and a potential slowdown in the technology cycle could all pose challenges to Singapore's highly open trade and manufacturing sectors. Should external demand decline more than expected, it could indirectly affect the balance between domestic prices and growth. Market analysts believe that the Monetary Authority of Singapore will maintain a cautious stance when weighing inflation against growth risks.