Singapore inflation holds steady in May despite mixed price pressures

Singapore’s inflation held steady in May, surprising economists as easing telecom costs helped balance rising prices across transport, food, and housing sectors.

Inflation in Singapore remained unchanged at 1.8% in May, coming in lower than economists’ expectations as declines in telecommunication service prices helped offset rising costs in private transport, accommodation, retail, and food sectors.

The reading was below the 2% forecast by economists surveyed by Reuters and matched April’s figure of 1.8%.

According to official data, inflation in private transport was driven higher by increased prices for cars and motorcycles, while accommodation, retail, and food expenses also contributed to overall price pressures.

Core inflation, which excludes accommodation and private transport costs, stood at 1.4%, below the expected 1.6%.

Read More: ICMA says inflation and liquidity pressures are weakening monetary policy impact

The Monetary Authority of Singapore (MAS) noted that although energy prices have eased recently, they remain higher compared to 2025 levels. It warned that past increases in energy costs may continue to filter through global supply chains, gradually pushing up production and transportation expenses for imported goods and services.

The central bank also highlighted that slower wage growth could ease pressure on service-related inflation, while domestic consumer spending may become more cautious amid ongoing economic uncertainty.

Market analyst Zaiver Wong of eToro suggested that higher fuel prices linked to geopolitical tensions, along with increased car ownership premiums, may have influenced the inflation trend. He also pointed out that Singapore’s strict vehicle quota system continues to push up ownership costs.

The report comes after MAS tightened monetary policy in April, its first such move since 2022, citing inflation risks driven by global geopolitical developments.

Unlike most central banks, MAS manages policy through exchange rate adjustments rather than interest rates, allowing the Singapore dollar to fluctuate within a managed band against a basket of currencies.

In its April review, MAS raised its inflation forecasts for both core and headline inflation to 1.5%–2.5% for 2026, up from the earlier projection of 1%–2%.

The latest inflation data also follows stronger-than-expected economic growth, with Singapore’s GDP expanding by 6% year-on-year in the first quarter, surpassing the 5.1% forecast.

The Ministry of Trade and Industry has maintained its 2026 growth forecast at 2%–4%, while warning that downside risks have increased due to ongoing geopolitical tensions, including the U.S.-Israel-Iran conflict.