In May, Singapore's inflation rate held steady at 1.8%, which was below the 2% anticipated by economists surveyed by Reuters and unchanged from April's figure. The primary drivers of inflation included private transport, accommodation, retail, and food costs, while a decline in telecommunication service prices helped to offset these increases.
Core inflation, which excludes accommodation and private transport, was reported at 1.4%, slightly lower than the 1.6% forecast. This inflation data comes after the Monetary Authority of Singapore (MAS) tightened its monetary policy in April for the first time since April 2022, citing inflation risks linked to geopolitical tensions in the Middle East.
Unlike many central banks that adjust interest rates, the MAS manages monetary policy through the exchange rate, allowing the Singapore dollar to fluctuate within an undisclosed band against a basket of currencies. Following its April review, the MAS raised its inflation forecasts for the year to a range of 1.5% to 2.5%.
Despite the inflation figures, Singapore's economy showed resilience, with a 6% GDP growth in the first quarter, surpassing the 5.1% growth forecast. However, the Ministry of Trade and Industry has cautioned that downside risks have increased due to the ongoing U.S.-Israel-Iran conflict, while maintaining its GDP growth forecast for 2026 at 2% to 4%