Expect Inflation for 2026 to Be Higher than Projected: DPM Gan
Why It Matters
Elevated inflation will tighten household budgets and raise operating costs, prompting policy and corporate responses to safeguard growth.
Key Takeaways
- •Singapore's 2026 GDP forecast raised to 2‑4% amid AI demand
- •Energy price spikes will push electricity tariffs higher in second half
- •Inflation expected above 1‑2% due to prolonged Middle East conflict
- •Households urged to conserve energy via vouchers and fan usage
- •Businesses can tap grants for efficiency to offset rising import costs
Summary
Singapore's Deputy Prime Minister Gan warned that 2026 inflation will exceed earlier forecasts as global energy shocks from the Middle East conflict feed through higher import prices. He also noted that the Monetary Authority of Singapore raised its 2026 GDP growth outlook to 2‑4% on strong AI‑driven demand and resilient first‑quarter activity.
Despite the upbeat growth outlook, sectoral fallout from the ongoing conflict is expected to dampen activity in the coming quarters. Rising oil and gas prices have already pushed the regulated electricity tariff up 2.1% to about 27 cents/kWh for Q2 2026, and a sharper adjustment is likely once the tariff reflects the full fuel cost surge.
Gan recalled that CPI and core inflation were previously projected at 1‑2%, but the conflict‑induced commodity price spike forces a revision upward. He urged households to conserve electricity, use climate vouchers for efficient appliances, and switch to fans, while encouraging firms to tap the Energy Efficiency Grant for greener equipment.
Higher inflation will erode household purchasing power and increase costs for transport and daily necessities, prompting both consumers and businesses to adopt energy‑saving measures. Policymakers may need to consider further support mechanisms to cushion the impact and preserve Singapore’s competitive edge.
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