Singapore's headline consumer price index rose 0.8 percent on the year in June, as it did in May. The index fell 0.1 percent on the month after advancing 0.7 percent previously. The Monetary Authority of Singapore's preferred measure of core inflation, which excludes the cost of accommodation and private road transport, was also unchanged at 0.6 percent in June. This index also fell 0.1 percent on the month after no change previously.

Steady core inflation in June reflects offsetting changes in key categories. Prices of services rose 0.7 percent on the year in June after a 1.1 percent increase in May, with electricity and gas prices falling at a slightly faster pace and prices for retail and other goods falling 1.0 percent after no change previously. Food price inflation eased from 1.1 percent to 1.0 percent. Private transport costs rose 2.0 percent on the year after a previous increase of 1.1 percent.

Officials at the MAS announced they would target a slightly reduced pace of appreciation of Singapore's exchange rate at their last quarterly meeting held in April. Reflecting their concerns about the impact of escalated global trade tensions, officials lowered their core inflation forecast for 2025 from a range of one percent to two percent to a range of 0.5 percent to 1.5 percent. The next policy review will be held next week.

Singapore’s inflation is forecast to remain tame at 0.9% in June after edging down from 0.9% in April to 0.8% in May, which is the lowest rate since 0.7% in February 2021. The CPI annual rate reached a recent peak of 7.5% in July and August 2022. On an annual basis, Singapore briefly slipped into deflation in 2020 (-0.2%), hit by a global slump at the onset of the pandemic, and also recorded a slightly deeper 0.5% drop in consumer prices in each of 2016 and 2015.

On the month, the total CPI is expected to show a slight 0.1% gain in June after jumping 0.7% in May and slipping in the previous two months, down 0.3% and 0.1%.

The Consumer Price Index (CPI) measures the average price changes in a fixed basket of consumption goods and services commonly purchased by the resident households over time. It is commonly used as a measure of consumer price inflation.

The CPI is rebased once every five years to reflect the latest consumption patterns and composition of goods and services consumed by resident households. The weighting pattern for the 2014-based CPI was derived from the expenditure values collected in the Household Expenditure Survey (HES) which was conducted from October 2012 to September 2013. These expenditure values were updated to 2014 values by taking into account price changes between 2012/13 and 2014.

The CPI covers only consumption expenditure incurred by resident households. It excludes non-consumption expenditures such as loan repayments, income taxes, purchases of houses, shares, and other financial assets etc.

An investor who understands how inflation influences the markets will benefit over those investors that do not understand the impact. Inflation is an increase in the overall prices of goods and services. The relationship between inflation and interest rates is the key to understanding how indicators such as the CPI influence the markets and your investments.

Inflation (along with various risks) basically explains how interest rates are set on everything from mortgages and auto loans to government securities. As the rate of inflation changes and as expectations on inflation change, the markets adjust interest rates. The effect ripples across stocks, bonds, commodities and your portfolio, often in a dramatic fashion.

By tracking inflation, whether high or low, rising or falling, investors can anticipate how different types of investments will perform. Over the long run, the bond market will rally (fall) when increases in the CPI are small (large). The equity market rallies with the bond market because low inflation promises low interest rates and is good for profits.