Singapore's retail sales growth eased in August, marking the softest rise since September 2023, as a slump in auto sales weighed on broader consumer spending.

Retail sales rose 0.7% year over year in August, weaker than the 1.3% increase recorded in July, according to data published Monday by the Singapore Department of Statistics. The figure missed the 1.7% growth consensus tracked by Trading Economics.

The slowdown was largely attributed to a 4.6% year-over-year drop in the sales of motor vehicles and parts. Excluding motor vehicles, retail sales accelerated, growing 1.6% year over year in August compared with a 1.3% rise in the previous month.

On a seasonally adjusted month-over-month basis, overall retail sales slipped 1.0% in August. However, excluding motor vehicles, sales rose 0.6% from July.

The moderation in overall retail sales comes as inflation continues to pressure household budgets. Singapore's headline consumer prices rose 2.2% year over year in August, burdening consumers with higher costs and dampening discretionary spending across several categories. The latest inflation print marked the highest since July 2024.

"Looking ahead, we believe risks to the inflation outlook remain skewed to the upside and expect core inflation to accelerate further in the coming months," according to ING Think's Regional Head of Research for Asia-Pacific, Deepali Bhargava.