Inflation drops to lowest level since February 2021 in June

Latest reading: Inflation dipped to 1.1% in June, down from May’s 1.2% and representing the lowest inflation rate in over four years. The result was driven by the slowest rise in transport prices since November 2023. Meanwhile, price pressures for food and non-alcoholic beverages plus housing and utilities largely stabilized at May’s level in June. The trend pointed down slightly, with annual average inflation coming in at 1.6% in June (May: 1.7%). Lastly, consumer prices increased 0.07% in June over the previous month, stable from May's reading. June's result marked the weakest reading since March.

Panelist insight: Nomura’s Euben Paracuelles and Yiru Chen said: “We maintain our 2025 headline inflation forecast of 1.8%. Our forecast pencils in an upward trajectory, mainly reflecting our expectation of a Ron95 price hike in August and potential second-round effects given strong labor market conditions. We expect the sales and service tax (SST) revision and new electricity tariff scheme, both effective 1 July, to have a modest impact on inflation.”

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