Singapore’s core inflation eases to 0.6% in May

It was mainly due to lower food inflation.

Singapore’s core inflation fell to 0.6% year-on-year (YoY) in May, down from 0.7% in April, according to a joint release by the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI).

The moderation was mainly due to lower food inflation. On a month-on-month (MoM) basis, core inflation was unchanged.

Overall inflation, measured by CPI-All Items, dipped slightly to 0.8% YoY from 0.9% in April. This was due to lower private transport inflation and easing core inflation. MoM, overall inflation rose by 0.7%.

Food inflation slowed to 1.1%, from 1.4% in April, as prices of non-cooked food rose more gradually. Electricity and gas inflation fell further to -3.7%, from -3.5% previously, reflecting a steeper decline in electricity prices.

Retail and other goods prices continued to fall, though at a slower pace of 1.0%, compared to 1.2% in April. This was due to higher prices for household appliances, which offset smaller declines in personal effects.

Private transport inflation slowed to 1.1%, down from 1.3%, on the back of smaller increases in car prices. Accommodation inflation remained at 1.1%, as slower rent increases were offset by higher housing maintenance costs.

Services inflation was also unchanged at 1.1%. Higher costs for point-to-point transport services and health insurance were balanced by a sharper drop in holiday expenses.

Imported inflation is expected to remain moderate. Although crude oil prices have risen in recent weeks, they are still near 2024 averages. Food commodity price increases are also expected to stay contained.

Whilst global trade tensions and rising energy costs could push prices up in some markets, Singapore is likely to be cushioned by weak external demand, which continues to exert disinflationary pressures.

Domestically, unit labour costs are projected to rise gradually as wage growth slows and productivity improves.

Ongoing government subsidies for essential services such as healthcare, pre-school education, and public transport are expected to keep services inflation in check.

Both MAS Core Inflation and CPI-All Items inflation are projected to average between 0.5% and 1.5% in 2025.

However, MAS cautioned that external risks have increased and could add uncertainty to the inflation outlook.