Singapore core inflation sees surprise drop in April

Singapore’s core inflation unexpectedly eased to 1.4% in April, down from 1.7% in March, defying forecasts from economists who had predicted a rise to 1.8%. The Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) attributed the slowdown to declines in services inflation and retail and other goods inflation. Overall inflation held steady at 1.8% for April, unchanged from March, as higher private transport and accommodation inflation were offset by the drop in core inflation. Private transport inflation surged to 8.1% in April, up from 6.6% in March, driven by higher petrol and car prices. Meanwhile, electricity and gas prices fell at a slower rate of 3% in April compared to 4.3% in March, due to a smaller decline in electricity prices. MAS and MTI cautioned that Singapore’s imported cost pressures are expected to intensify and broaden in the coming months, as global energy price increases from Middle East developments ripple through supply chains. This will likely raise production and transport costs for a wider range of imported goods and services. Domestically, services unit labor costs are expected to rise at a slower pace this year, with nominal wage growth easing from last year’s strong levels. Consumer spending may also become more cautious amid rising economic uncertainty. Retail and other goods inflation slowed to 1.5% in April from 1.8% in March, primarily due to a reduction in water price inflation. Services inflation eased to 1.5% from 2.1% in March, driven by smaller increases in health insurance costs and lower telecommunication services prices. Food inflation remained unchanged at 1.6%, with non-cooked food and food services inflation stable from March. Accommodation inflation rose slightly to 0.4% from 0.3%, due to higher housing rents. The MAS and MTI reaffirmed their April forecasts for overall and core inflation to average between 1.5% and 2.5%. The regulated electricity tariff for each quarter is based on average natural gas prices from the first 2.5 months of the preceding quarter, meaning higher global energy prices observed in April and May will only reflect in the tariff starting July 2026.