Broker: CGS International
Date of Report: August 25, 2025
Singapore Inflation Eases Sharply: Key Trends, Sector Breakdown, and Macro Forecasts for Investors
Singapore’s Inflation Slows Sharply in July 2025: What Market Participants Need to Know
Singapore’s inflation landscape shifted in July 2025, with both core and headline Consumer Price Index (CPI) figures coming in below expectations. The moderation in cost pressures is reshaping the nation’s economic outlook, presenting new challenges and opportunities for investors, analysts, and policymakers. This comprehensive update covers the latest data, sector-level movements, macroeconomic forecasts, and policy implications.
Headline and Core Inflation: July 2025 Highlights
Core inflation dropped to 0.5% year-on-year (YoY) in July 2025, while headline inflation slowed to 0.6% YoY, both undershooting the consensus forecast of 0.8%.
The main drivers of this moderation were softer retail and goods prices, significant declines in electricity and gas costs, and reduced accommodation costs.
Accommodation costs slowed to 0.5% YoY, down from 1.0% in June 2025.
| CPI Component |
Weight (%) |
May 25 (% YoY) |
Jun 25 (% YoY) |
Jul 25 (% YoY) |
7M25 (% YoY) |
Jul 25 (% MoM, sa) |
| Headline CPI |
100.0 |
0.8 |
0.8 |
0.6 |
0.9 |
0.0 |
| Core CPI |
– |
0.6 |
0.6 |
0.5 |
0.6 |
– |
| Food |
20.4 |
1.1 |
1.0 |
1.1 |
1.2 |
0.3 |
| Clothing & Footwear |
1.7 |
-3.3 |
2.2 |
-2.3 |
-1.4 |
-2.4 |
| Housing & Utilities |
29.4 |
1.0 |
0.9 |
0.3 |
1.0 |
0.0 |
| Health Care |
10.1 |
2.7 |
2.8 |
2.4 |
2.2 |
-0.3 |
| Transport |
13.1 |
1.7 |
2.0 |
2.1 |
2.1 |
0.2 |
| Communication |
3.8 |
-1.9 |
-2.4 |
-2.6 |
-1.6 |
-0.1 |
| Recreation & Culture |
6.0 |
-2.0 |
-2.6 |
-1.2 |
-1.4 |
1.1 |
| Education |
5.8 |
0.5 |
0.5 |
0.7 |
0.4 |
0.3 |
| Misc. Goods & Services |
4.4 |
-0.4 |
0.0 |
-0.4 |
-0.3 |
-0.2 |
Sector Highlights: Energy, Utilities, and Accommodation
- Electricity and Gas: Inflation in this category dropped further to -5.6% YoY in July 2025 (from -3.9% in June), driven chiefly by a 2.3% cut in electricity tariffs (to 0.65 cents/kWh before GST for the Jul–Sep quarter) and a 1.9% reduction in gas tariffs. These adjustments reflect cheaper fuel prices and government U-Save rebates for over 950,000 HDB households.
- Housing & Utilities: Growth slowed to 0.3% YoY, down sharply from 0.9% in June.
- Accommodation: Further moderation, helping to dampen headline inflation.
- Food: Remained stable at 1.1% YoY, indicating limited food price pressures.
Government Policy Impact: Rebates and Subsidies Cushion Costs
The Ministry of Finance’s U-Save rebates (S$110–190 in July) and partial/full S&CC rebates played a crucial role in cushioning middle and lower-income households from elevated living costs.
These policy moves are expected to keep electricity and gas inflation subdued through Q3 2025.
Macro Risks and Inflation Path: Balanced Outlook
Singapore’s inflation trajectory is shaped by two-sided risks:
- Downside: Easing global crude oil prices and broadly contained food commodity prices suggest moderate imported inflation in the near term.
- Upside: Persistent trade tensions and renewed geopolitical shocks could drive up imported energy and shipping costs.
- Offsetting Factors: Government subsidies for essential services and weaker global demand are expected to exert a disinflationary drag.
CGS International maintains its 2025 headline inflation forecast at 1.0% YoY, in line with the Monetary Authority of Singapore’s expected range of 0.5–1.5%.
Key Macro Forecasts for Singapore and Regional Peers
| Metric |
2018 |
2019 |
2020 |
2021 |
2022 |
2023 |
2024 |
2025F |
2026F |
| Real GDP (% YoY) – Singapore |
3.5 |
1.3 |
-3.9 |
9.7 |
3.8 |
2.2 |
4.4 |
1.6 |
2.5 |
| Headline Inflation (avg, % YoY) – Singapore |
0.4 |
0.6 |
-0.2 |
2.3 |
6.1 |
4.8 |
2.4 |
1.0 |
1.7 |
| Unemployment Rate (end-period, %) – Singapore |
1.9 |
2.0 |
2.8 |
2.1 |
1.8 |
1.8 |
1.7 |
2.0 |
2.1 |
| Fiscal Balance (% of GDP) – Singapore |
0.7 |
0.2 |
-10.8 |
0.3 |
0.3 |
-0.5 |
0.9 |
0.9 |
0.2 |
| Current Account Balance (% of GDP) – Singapore |
15.2 |
14.5 |
16.6 |
19.8 |
18.0 |
17.7 |
17.5 |
16.4 |
14.2 |
| International Reserves (US\$ bn) – Singapore |
287.7 |
279.5 |
362.3 |
417.9 |
287.5 |
347.6 |
371.4 |
380.0 |
390.0 |
| SGD/USD (end-period) |
1.36 |
1.35 |
1.32 |
1.35 |
1.34 |
1.32 |
1.36 |
1.30 |
1.31 |
Policy and Market Implications
- Monetary policy in Singapore continues to focus on exchange rate management rather than interest rates.
- The balance of risks remains two-sided, with government action expected to keep core inflation subdued in the face of external shocks.
- Major macro indicators (GDP growth, inflation, unemployment, fiscal and current account balances) reflect a cautiously optimistic outlook for 2025 and beyond.
Disclaimer and Distribution Notes
This report is intended for institutional investors and market professionals. It is distributed by CGS International and its relevant regulated entities across global jurisdictions. The content is general in nature and does not constitute an offer, recommendation, or solicitation to buy or sell securities or other financial instruments. Investors should consult their own advisors for any investment decisions.
Conclusion: Singapore’s Inflation Eases, Outlook Remains Balanced for 2025
Singapore’s economic environment in July 2025 is marked by easing inflation, ongoing government support, and a broadly balanced risk outlook. With headline inflation forecast to remain low and sector-level cost pressures moderating, investors can expect continued stability, barring major global disruptions. The nuanced interplay of domestic policy and international market forces will be crucial for shaping the investment landscape in the months ahead.
