Singapore inflation holds at 1.8% in May, cooler than expected as services costs ease

Inflation in Singapore held steady at 1.8% in May, falling short of economists' expectations as underlying price pressures remained subdued.

The figure was below the 2% expected by economists polled by Reuters and unchanged from the 1.8% recorded in April.

The largest contributors to inflation were private transport, accommodation, retail and food costs, according to government data, which were offset by a decline in prices for telecommunication services

Core inflation, which strips out accommodation and private transport costs, came in at 1.4%, against the 1.6% forecast.

The data also comes as Singapore's central bank tightened its monetary policy settings in April, its first policy tightening since April 2022, citing inflation risks stemming from the conflict in the Middle East.

Unlike most central banks, the Monetary Authority of Singapore manages monetary policy through the exchange rate rather than interest rates. It allows the Singapore dollar to move within an undisclosed policy band against a basket of currencies of its major trading partners.

Rather than targeting a specific exchange rate, the MAS allows the Singapore dollar to move within an undisclosed policy band against a basket of currencies.

At its April policy review, the MAS raised its forecasts for both core and headline inflation to 1.5% to 2.5% for the year, from 1% to 2% previously.

The inflation report comes as Singapore's economy has remained resilient. Gross domestic product expanded 6% in the first quarter from a year earlier, exceeding the 5.1% growth forecast in a Reuters poll.

The Ministry of Trade and Industry has maintained its 2026 GDP growth forecast at 2% to 4%, although it warned that "downside risks have risen significantly as a result of the U.S.-Israel-Iran conflict."