Impact of Increases in Electricity Costs on Prices of Goods and Services in Singapore
Ministry of Trade and IndustrySpeakers
Summary
This question concerns an inquiry by Mr Melvin Yong Yik Chye on the impact of recent increases in electricity costs on the prices of goods and services, and whether specific sectors were assessed to be more likely to pass these costs to consumers. Minister Dr Tan See Leng explained that the electricity tariff increase contributed 0.02 percentage-point to headline inflation in the second quarter of 2026, with the impact expected to pick up following a 17% tariff rise in the third quarter. He noted that assessing the indirect passthrough of costs by firms is difficult due to broader cost pressures on raw materials and operating expenses, while households can consider switching to fixed-price plans to reduce exposure to price volatility. To mitigate cost pressures, the Government expanded the Energy Efficiency Grant to all sectors and introduced a support package featuring SME Cash Grants, additional U-Save rebates, and CDC Vouchers. Minister Dr Tan See Leng concluded that the Government will continue monitoring business costs and consumer prices and stands ready to provide further support if necessary.
Transcript
53 Mr Melvin Yong Yik Chye asked the Minister for Trade and Industry (Energy and Industry) (a) whether the Ministry has assessed the impact of recent increases in electricity costs on the prices of goods and services; and (b) whether the Ministry has assessed any sector to be more likely to pass on these higher costs to consumers.
Dr Tan See Leng: Singapore's headline inflation picked up from 1.5% year-on-year in the first quarter of 2026 to 1.8% in the second quarter, following the onset of the conflict in the Middle East in end-February.
In the second quarter of 2026, the regulated electricity tariff increased by 2% compared to the first quarter. The tariff increased by another 17% in the third quarter, as the impact of higher oil and gas prices flowed through the system. Overall, the electricity price increase in the second quarter contributed 0.02 percentage-point to the increase in headline inflation in the quarter compared to the first quarter. The impact is likely to pick up in the months ahead given the higher regulated electricity tariff in the third quarter.
Currently, around one-third of households purchase electricity from retailers on longer term fixed-price plans, which are less volatile and may be cheaper than the regulated electricity tariff. Households on regulated tariff can consider switching to fixed-price plans with the retailers to minimise their exposure to the volatility in oil and gas prices.
It is difficult to assess the indirect impact on inflation caused by firms' passthrough of higher electricity costs to consumers, as firms would have also faced other cost increases, such as for raw materials and other operating costs, since the start of the conflict.
The Government recognises the cost pressures faced by businesses and households, and has provided support to help them cope. For instance, in April 2026, the Government expanded the Energy Efficiency Grant to all sectors. The Government has also recently rolled out a second support package, which includes a Cash Grant to help SMEs with elevated business costs, additional U-Save rebates to defray the increase in utility bills for HDB households and a fresh tranche of CDC Vouchers to help households manage the costs of daily necessities.
The Government will continue to closely monitor business costs and consumer prices, and stands ready to provide further support to businesses and households if necessary.