Singapore Core Inflation Holds Steady at 0.6% in May Amid Global Risks

Singapore's core inflation rose 0.6% year-on-year in May, matching economist expectations and marking the fifth straight month below 1%, according to official data released Monday. The core rate, which excludes private road transport and accommodation costs, aligned with a Reuters poll forecast, reflecting continued subdued price pressures.

Headline inflation also held steady at 0.8% annually in May, in line with median expectations. Economists attribute the low inflation trend to weak global demand and easing domestic cost pressures. However, analysts are closely monitoring external risks that could push inflation higher in the months ahead.

DBS senior economist Chua Han Teng warned that escalating tensions in the Middle East could pose upside risks. Disruptions to global oil supplies—particularly through the Strait of Hormuz, which handles about 25% of the world’s oil and 20% of its LNG—could impact Singapore’s energy imports, raising electricity and travel-related costs.

Singapore’s economic outlook has dimmed amid rising geopolitical uncertainties and trade tensions. In April, the Monetary Authority of Singapore (MAS) eased monetary policy for the second time this year, while lowering its 2025 inflation forecast to a range of 0.5% to 1.5%. The central bank also revised down GDP growth expectations for 2025 to 0%–2%, citing recession risks and potential job losses.

A recent MAS survey in June showed that median forecasts for 2025 headline and core inflation were trimmed to 0.9% and 0.8%, respectively. Nearly 60% of respondents expect further policy easing in the upcoming monetary review.

While inflation remains under control, Singapore faces mounting external threats that could derail its economic recovery and keep policymakers on alert.