SINGAPORE — Inflation in Singapore held steady at 1.8% in May, unchanged from the 1.8% recorded in April, while core inflation was 1.4%.

Economists polled by Reuters had anticipated headline inflation would reach 2% and core inflation would be 1.6% for May. Higher car and motorcycle prices drove up private transport inflation. Accommodation, retail, and food costs also contributed to overall price growth. These increases were partially offset by lower prices for telecommunication services.

The Monetary Authority of Singapore tightened its monetary policy settings in April, citing inflation risks stemming from the conflict in the Middle East. This was the first policy tightening since April 2022. The central bank manages monetary policy through the exchange rate, allowing the Singapore dollar to move within an undisclosed policy band against a basket of currencies of its major trading partners.

"Elevated pump prices linked to the Iran conflict and higher car ownership premiums in the city-state likely contributed to the inflation reading," said Zaiver Wong, a market analyst at eToro. "Restrictions on vehicle population growth in the country have put pressure on ownership premiums."

The central bank stated that energy prices have recently eased but remain elevated compared to 2025 levels. It noted that higher energy costs are expected to raise production and transport costs for a wider range of Singapore's imported goods and services over time. "As higher energy costs pass through global supply chains with a lag, they are expected to raise production and transport costs for a wider range of Singapore's imported goods and services over time," the Monetary Authority of Singapore wrote. The authority also stated that service labor costs are likely to increase at a slower pace this year as nominal wage growth eases. It added that domestic consumer spending could turn more cautious amid economic uncertainty.

During its April policy review, the Monetary Authority of Singapore raised its forecasts for both core and headline inflation to a range of 1.5% to 2.5% for the year. The previous inflation forecast for the year was 1% to 2%. Singapore's gross domestic product expanded 6% in the first quarter from a year earlier, exceeding a Reuters poll forecast of 5.1% growth. The Ministry of Trade and Industry maintained its 2026 GDP growth forecast for Singapore at 2% to 4%. The ministry warned that "Downside risks have risen as a result of the U.S.-Israel-Iran conflict."