Singapore inflation again comes in below expectations; MAS may remain on hold

Overview

This report discusses Singapore's May inflation data and its implications for MAS monetary policy. Goldman Sachs points out that against the backdrop of a global oil price shock, both Singapore's headline CPI and core CPI came in below expectations for a second consecutive month, indicating that underlying price pressures remain mild.

Core views

The core view is that the latest inflation data do not support a preemptive adjustment to the policy setting at the July MAS meeting. Although MAS will monitor the lagged pass-through of energy costs and second-round inflation risks, it is more likely to remain patient given that core inflation is below the official forecast range and the main upside in prices was driven by seasonal factors.

Analysis framework

The report compares year-over-year inflation, month-over-month inflation, market consensus, Goldman Sachs forecasts, and the MAS forecast range, and further decomposes the seasonal drivers behind the rise in May headline CPI month-over-month to assess whether inflation pressure is broad-based and policy-relevant.

Methodology notes

• Macroeconomic data trackingCPI year-over-year and month-over-month analysis

  Assess price pressure through year-over-year and month-over-month changes in headline CPI and core CPI.

  The report emphasizes that the month-over-month rise in headline CPI in May mainly came from quarterly housing maintenance and repair charges, while core CPI was flat month-over-month, indicating that price pressures are not spreading broadly.

• Policy assessmentInflation relative to the central bank forecast range

  Compare actual core inflation with the official MAS forecast range.

  The average core CPI for the first five months of 2026 was 1.4%, below the MAS 2026 forecast range of 1.5%-2.5%, reducing the need for early tightening or a policy adjustment.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Singapore macro assets

  Inflation data affect MAS policy expectations and may indirectly influence Singapore interest rates, exchange rates, and local risk asset pricing.

  Strengths

  Inflation came in below expectations and core price pressures remain mild, helping to ease expectations of policy tightening.

  Weaknesses

  The report does not provide specific trading recommendations, asset price targets, or quantified market impact.

  Comparison

  Both headline CPI and core CPI came in below the Bloomberg consensus, and the year-to-date average core CPI is also below the MAS forecast range.

  Risks

  Energy costs may pass through to consumer prices with a lag and trigger second-round inflation pressure.

Key data

• May headline CPI1.8% yoyBelow the Bloomberg consensus expectation of 2.0%; Goldman Sachs forecast was 1.7%, and the previous reading was 1.8%.
• May core CPI1.4% yoyBelow the Bloomberg consensus expectation of 1.6%; Goldman Sachs forecast was 1.5%, and the previous reading was 1.4%.
• May headline CPI month-over-month0.7% mom NSARebounded from -0.3% mom NSA in April, mainly explained by seasonal factors.
• May core CPI month-over-month0.0% mom NSABelow the 0.2% mom NSA increase in April.
• Average core CPI for the first five months of 20261.4% yoyBelow the MAS 2026 forecast range of 1.5%-2.5%.

Impact & implications

For markets and policy, inflation undershooting expectations for a second straight month lowers the probability of a preemptive MAS monetary policy adjustment in July. If the energy price shock does not clearly pass through to broader consumer prices, the policy stance may remain skewed toward wait-and-see.

Risks

• The global oil price shock may pass through to consumer prices through lagged energy costs.
• MAS has indicated the need to monitor second-round inflation risks arising from higher energy costs.
• Although the month-over-month increase in May headline CPI is explained as seasonal, the assessment of mild inflation may need to be revised if price increases spread across more categories later.

What to watch

• Whether MAS adjusts its monetary policy settings at the July 2026 meeting.
• Whether subsequent core CPI continues to remain below the MAS forecast range.
• The magnitude and lag of energy cost pass-through to consumer prices.
• Whether prices outside seasonal categories such as housing maintenance and repair costs begin to rise more broadly.