By Amanda Lee
Singapore households' energy costs are set to rise, which could damp consumer spending and weigh on economic growth.
Like many countries in the region, Singapore relies heavily on energy imports from the Middle East. "Natural gas prices had increased sharply from the end of February and remained elevated from April to June due to the conflict in the Middle East," the Energy Market Authority said Tuesday.
About 95% of the financial hub's electricity is produced from imported natural gas, said EMA, which serves as Singapore's power system operator and industry regulator. Natural gas is also the main feedstock for town gas, which is used for cooking and heating water.
Electricity and town gas prices in Singapore will rise for the quarter starting in July because of higher natural-gas costs, EMA said.
Singapore's electricity and town-gas tariffs are determined on a quarterly basis, based on gas prices in the first 2.5 months of the previous quarter, the regulator said.
City Energy, which produces town gas, said that the tariff for households will increase by 7.1% in the three months ending Sept. 30 due to higher fuel costs.
There is a large backlog of shipments after a monthslong near-shutdown of the Strait of Hormuz, a vital shipping lane for energy flows to Asia. Even with traffic slowly resuming in the waterway, it would take a long time for prices to stabilize and inflation to cool.
Consumers on electricity retail contracts might also see higher prices when renewing their contracts, EMA said, adding that it is monitoring the fuel supply situation closely and working with the industry to secure supplies.
"The situation in the Middle East remains uncertain," EMA said.
Should the situation improve, fuel prices could fall and lead to lower tariffs for electricity and town gas in the fourth quarter, it added.
Write to Amanda Lee at amanda.lee@wsj.com