Source Credit : Portfolio Prints
Singapore’s inflation rate held steady at 1.8% in May, missing economists’ expectations as lower telecommunication costs helped offset rising prices for private transport, accommodation, retail goods and food.
The reading came in below the 2% forecast in a Reuters poll and was unchanged from April’s 1.8%.
Government data showed that higher car and motorcycle prices pushed up private transport inflation, while increased accommodation, retail and food expenses also contributed to overall price growth.
Core inflation, which excludes accommodation and private transport costs, eased to 1.4%, below economists’ expectations of 1.6%.
In a statement, the Monetary Authority of Singapore (MAS) said that although energy prices have moderated recently, they remain elevated compared with 2025 levels.
“As higher energy costs filter through global supply chains with a lag, they are expected to increase production and transportation costs for a broader range of Singapore’s imported goods and services over time,” the central bank said.
The MAS also noted that service-sector labour costs are likely to rise more slowly this year as nominal wage growth moderates, while domestic consumer spending could become more cautious amid heightened economic uncertainty.
Following the data release, eToro market analyst Zaiver Wong said elevated fuel prices linked to tensions involving Iran, along with higher vehicle ownership premiums, likely contributed to the latest inflation reading.
Singapore’s strict limits on vehicle population growth have continued to put upward pressure on car ownership costs, Wong added.
The inflation data comes after Singapore’s central bank tightened its monetary policy settings in April, marking its first policy tightening since April 2022, citing inflationary risks arising from tensions in the Middle East.
Unlike most central banks, the MAS conducts monetary policy through exchange rate management rather than interest rates, allowing the Singapore dollar to fluctuate within an undisclosed band against a basket of currencies from its major trading partners.
At its April policy review, the MAS raised its full-year forecasts for both headline and core inflation to between 1.5% and 2.5%, up from its previous range of 1% to 2%.
The inflation report follows stronger-than-expected economic growth in the first quarter, with gross domestic product expanding 6% year-on-year, surpassing the 5.1% forecast in a Reuters poll.
The Ministry of Trade and Industry has maintained its 2026 GDP growth forecast at 2% to 4%, though it warned that downside risks have increased significantly due to the ongoing U.S.-Israel-Iran conflict.
