In May, Singapore’s inflation rate met economists’ expectations, with the headline inflation rising to 3.1%, up from 2.7% in April, according to data released by the Department of Statistics. This increase aligns with the median forecast from private-sector economists polled by Bloomberg and is primarily attributed to higher private transport costs.

Core inflation, which excludes accommodation and private transport, remained steady at 3.1%, unchanged from April, and also met economists’ median estimates. On a month-to-month basis, the overall consumer price index (CPI) increased by 0.7% in May, while the core CPI rose slightly by 0.1%.

Economists suggest that these inflation figures will influence the Monetary Authority of Singapore (MAS) during its upcoming monetary policy review in July. Analysts do not expect any immediate adjustments to policy settings, as the persistent nature of core inflation is a primary concern for MAS.

Core Observations:

Private transport costs surged by 2.8% year-on-year, a notable increase from the previous month’s 0.3% rise, due to escalating car, motorcycle, and petrol prices.
Accommodation inflation eased slightly to 3.4%, down from 3.5%, as housing rent increases moderated.
For core inflation components, electricity and gas prices saw the most significant rise at 6.9%, although this was a decrease from 7.6% in April due to a smaller increase in electricity prices.
Food inflation remained stable at 2.8%, indicating steady food service costs, while retail and other goods inflation decreased to 1.5% from 1.6% due to slower price increases in personal effects and alcoholic beverages.
Conversely, services inflation edged up to 3.6% from 3.5%, driven by higher holiday expenses and a reduced decline in airfares.
MAS and the Ministry of Trade and Industry (MTI) have maintained their full-year inflation forecasts, projecting both headline and core inflation to average between 2.5% and 3.5%. Excluding the temporary effects of the goods and services tax hike, these figures are expected to fall between 1.5% and 2.5%.