On the other hand, Chua Hak Bin and Brian Lee Shun Rong of Maybank Securities have maintained their core inflation forecast at 0.5% in 2025 and 0.8% in 2026, while keeping their 2025 and 2026 headline inflation projection at 0.8% and 0.9% respectively.
DBS Group Research’s Chua Han Teng projects average headline and core inflation for 2025 at 1.0% and 0.8%, respectively, falling within the MAS’s unchanged official forecast range of 0.5 to 1.5%.
On a m-o-m basis, Singapore’s core inflation declined marginally by 0.1% in June, while on a y-o-y basis core inflation “held steady” at 0.6%, to which Koh notes is below both the Bloomberg consensus of 0.7% and UOB’s forecast of 0.8%.
He writes: “On a three-month basis, core inflation momentum strengthened in June. However, this may be overstated due to the strong m-o-m increase in April associated with the phased increase in MediShield Life premiums.”
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Koh adds that “inflation pervasiveness”, which is measured by the share of consumer price index (CPI) basket items with y-o-y inflation above desired levels fell to 26.1% in June, remaining “well below” the 2016 to 2019 average of about 31%.
“Nearly half of the CPI basket items recorded either a negative or flat y-o-y CPI outturn, hinting at potential deflationary risks,” writes Koh.
The UOB economist sees that imported inflation “should remain contained”, as external inflation conditions stabilised in June and “remain subdued” as proxied by UOB’s import-weighted inflation index, which is constructed using the CPI of Singapore’s top 10 import partners.
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On MAS’s view, Koh sees “a more cautious stance”, noting that MAS could maintain its full-year 2025 core inflation forecast range of 0.5% to 1.5% for July. This, he notes, may not qualify as being in the “lower half” of the range, which would otherwise “serve as a justification” for further easing in July.
To this end, Koh notes that both domestic and external inflation indicators have broadly met the criteria required for further easing in July, although the growth outperformance in 1H2025 and limited signs of export-growth payback from earlier front-loading suggest that MAS could adopt a “wait-and-see” approach and defer policy easing to October instead.
He writes: “In our view, further MAS easing, via an adjustment to a zero percent Singapore dollar nominal effective exchange rate (S$NEER) appreciation stance is likely a matter of when, not if and while the Jun CPI data raises the odds of an earlier easing move, we adhere to our base case for the move to be delivered in the October monetary policy statement (MPS).”
DBS’s Chua shares a similar view with his peer at UOB.
He writes: “We expect the MAS to adopt a ‘wait and see’ approach in July, and keep the door open for a third easing in October, following the slight reductions of the S$NEER policy band slope in January and April.”
Meanwhile, RHB’s Gan and Raveenthar expect inflation to “remain tame” in 2025, due to the absence of strong demand-pull pressures and the potential for an economic slowdown in the second half of the year.
Softer economic sentiment and easing global interest rates, they note, are likely to dampen business activity and private consumption, thus keeping price pressures contained and hence a “more subdued” inflation environment.
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“Despite Singapore's stronger gross domestic product (GDP) growth at 4.2% y-o-y in 1H2025, we think the momentum may be short-lived with growth likely to ease in the second half of the year,” write Gan and Raveenthar.
They add: “Looking forward, there remain significant uncertainties and downside risks in the global economy in 2H2025, given the lack of clarity over the US administration's tariff policies.”
Gan and Raveenthar’s base-case scenario assumes weaker energy prices for the year, as tariff-related uncertainties may weigh on global growth, reduce commodity demand and exert downward pressure on prices, helping to keep inflation subdued across Asean.
However, unexpected developments such as heightened geopolitical tensions or unanticipated oil supply cuts by producers could push energy prices higher and reignite inflationary pressures.
They note that the moderation in Singapore's inflation is largely driven by cost-push factors, rather than strong demand-pull pressures, pointing to food and transport prices falling 0.1% and 0.2% m-o-m respectively.
“This suggests that MAS and the Ministry of Trade and Industry (MTI) noted that while ongoing trade tensions may fuel inflation in some economies, their impact on Singapore's import prices is likely to be offset by disinflationary pressures stemming from weaker global demand,” write the pair.
Overall, Gan and Raveenthar expect MAS to widen the S$NEER policy band from the current 2.0% to 3.0% in the upcoming July MPS meeting. “However, flattening of slope remains possible given the lingering global uncertainties in 2H2025,” they add.
Maybank’s Chua and Lee expect MAS to maintain the current modest appreciation bias at the upcoming July meeting and for the rest of 2025, having reduced the slope of its S$NEER policy band for two straight meetings in January and April.
They write: “This is in view of the resilient economic outlook and benign, but stabilising core inflation.”
The pair have also opted to keep their 2025 GDP growth forecast of 3.2%, while expecting MTI to upgrade its forecast range to between 2% to 3% once final second quarter GDP statistics are released in August.
In June, Singapore’s manufacturing sector continued to be resilient, with output growth accelerating to a seven-month high of 8% y-o-y, from a downward-revised 3.6% in May. In seasonally-adjusted m-o-m terms, output was flat.
Chua and Lee write: “Second quarter manufacturing grew 5.2% y-o-y, as downward revisions in April and May more than offset the better-than-expected June upturn. We expect final 2Q2025 GDP growth to come in unchanged from the advance print, at 4.3%.”
Along with exports, they expect manufacturing growth to “likely slow” after higher reciprocal tariffs for the region kick in on Aug 1.
“Positives that will mitigate the payback and severity of the second half slowdown are relatively lower US tariffs compared to trading partners, broadening artificial intelligence (AI) demand, a smaller US inventory overhang and the US-China de-escalation with a probable extension of the US-China tariff truce beyond Aug 12,” write the pair.
