Singapore's inflation rate remained unchanged at 1.8% in May, coming in below economists' expectations of 2% as surveyed by Reuters [1]. This steady figure matched the 1.8% recorded in April, with lower telecommunication service prices helping to offset increases in private transport, accommodation, retail, and food costs [1]. Notably, higher car and motorcycle prices contributed to an uptick in private transport inflation [1].
Core inflation, which excludes accommodation and private transport, registered at 1.4%, also underperforming the 1.6% forecast [1]. The Monetary Authority of Singapore (MAS) noted that while energy prices have recently eased, they remain elevated compared to 2025 levels. The MAS warned that as higher energy costs filter through global supply chains, they are expected to increase production and transport costs for a broader range of Singapore's imported goods and services over time [1].
The MAS also indicated that service labor costs are likely to rise at a slower pace this year due to easing nominal wage growth, and domestic consumer spending could become more cautious amid ongoing economic uncertainty [1]. In April, the MAS tightened its monetary policy settings for the first time since April 2022, citing inflation risks related to the Middle East conflict [1]. Unlike most central banks, the MAS manages monetary policy through the exchange rate, allowing the Singapore dollar to move within a policy band against a basket of major trading partner currencies [1].
At its April policy review, the MAS raised its forecasts for both core and headline inflation to a range of 1.5% to 2.5% for the year, up from the previous 1% to 2% range [1]. The latest inflation data follows robust economic growth in the first quarter, with Singapore's GDP expanding by 6% year-on-year, surpassing the 5.1% growth forecast by Reuters [1]. The Ministry of Trade and Industry has maintained its 2026 GDP growth forecast at 2% to 4%, but cautioned that downside risks have increased significantly due to the U.S.-Israel-Iran conflict [1].
CONCLUSION
Singapore's inflation remained steady and below expectations in May, reflecting easing services costs and offsetting pressures from transport and energy. The MAS continues to monitor inflation risks and has tightened policy settings, while economic growth remains robust but faces heightened downside risks. Market sentiment appears cautiously optimistic, with inflation contained but external uncertainties persisting.