Key Points
- Core inflation eased to 1.4% year-on-year (YoY) in April (March: 1.7%), its softest reading since late 2025, as services and retail goods prices grew more slowly.
- Headline CPI held at 1.8% YoY, unchanged from March. Private transport inflation surged to 8.1% on higher global petrol prices, offsetting the drop in core inflation.
- An energy price increase is coming in July: electricity tariffs are set quarterly on a lagged basis, meaning the recent fuel price spike will only hit household electricity bills from 3Q26.
- MAS tightened policy in April by slightly increasing how fast the Singapore dollar (SGD) is allowed to appreciate. A stronger SGD makes imports cheaper and helps contain inflation.
- We maintain a constructive view on Singapore equities, with an STI target of 5,987 by end-2028 and approximately 5% annual dividend yield.
Think of Singapore's inflation picture in April as having two layers.
The first layer, core inflation, tracks everyday prices like food, services, and retail goods, and it continued to cool. MAS Core Inflation fell to 1.4% year-on-year (YoY), down from 1.7% in March. Services prices in particular rose more slowly, with health insurance cost growth moderating and telecoms prices actually falling.
The second layer is what you pay at the petrol pump and in transport costs, and here, the Middle East conflict is making itself felt. Private transport inflation jumped to 8.1% YoY in April as global oil prices rose sharply following the Strait of Hormuz blockade. Because headline CPI includes both layers, it stayed flat at 1.8% YoY: the softening in everyday prices was cancelled out by the spike in transport costs.
One important note on electricity bills: the tariff Singaporeans pay is set each quarter based on gas prices from the previous period. That means the sharp rise in global energy prices from April to May 2026 will not show up in your electricity bill until July. This delayed pass-through is the main reason MAS and MTI expect inflation to stay elevated in the second half of 2026.
Table 1: Singapore CPI — April 2026 Snapshot
|
Indicator |
Apr 2026 |
Mar 2026 |
Comments |
|
CPI-All Items (YoY) |
1.8% |
1.8% |
CPI-All Items inflation was unchanged, as higher private transport and accommodation inflation was offset by lower inflation in services and retail & other goods. |
|
MAS Core Inflation (YoY) |
1.4% |
1.7% |
This was due to lower services and retail & other goods inflation. |
|
Private Transport (YoY) |
8.1% |
6.6% |
Private transport inflation rose on account of larger increases in petrol and car prices. |
|
Retail & Other Goods |
1.5% |
1.8% |
Retail & other goods prices rose at a slower pace as water price inflation eased in April. |
|
Services (YoY) |
1.5% |
2.1% |
Services inflation fell, mainly due to a smaller increase in health insurance costs, as well as lower telecommunication services prices. |
|
Food (YoY) |
1.6% |
1.6% |
Food inflation was broadly unchanged as non-cooked food and food services inflation in April was similar to that in March. |
|
Electricity & Gas (YoY) |
-3.0% |
-4.3% |
Electricity & gas prices fell at a slower pace due to a smaller decline in electricity prices^ |
|
Accommodation (YoY) |
0.4% |
0.3% |
Accommodation inflation edged up due to a larger increase in housing rents. |
|
Full-year 2026 forecast (Core / All Items) |
1.5–2.5% |
1.0–2.0%* |
Singapore’s imported cost pressures are expected to pick up and broaden in the months ahead. As higher energy and other input costs arising from the developments in the Middle East pass through global supply chains, they will raise production and transport costs for a wider range of Singapore’s imported goods and services. On the domestic front, services unit labour costs are likely to increase at a slower pace this year as nominal wage growth eases from the firm levels last year. Meanwhile, domestic consumer spending could turn more cautious amid rising economic uncertainty. |
|
Source: MAS, MTI, Department of Statistics Singapore. Consumer Price Developments in April 2026, published 25 May 2026. * Prior forecast before April 2026 MAS review. ^The regulated electricity tariff for each quarter is set based on the average natural gas prices in the first two and a half months of the preceding quarter, among other factors. Hence, the higher global energy prices over April to May will only be reflected in the regulated electricity tariff in the third quarter of 2026, starting from July. |
|||
How MAS is responding: A stronger SGD as a shock absorber
Unlike most central banks, MAS does not use interest rates as its main policy tool. Instead, it manages the value of the Singapore dollar against a basket of its trading partners’ currencies — known as the S$NEER (Singapore Dollar Nominal Effective Exchange Rate). By controlling how fast the SGD appreciates, MAS can make imports cheaper or more expensive, which in turn affects inflation.
At its April 2026 review, MAS decided to slightly increase the rate at which the SGD is allowed to strengthen. The width of the policy band (the range within which MAS allows the SGD to trade) and its centre were both left unchanged. In practical terms, this means the SGD will appreciate a little faster against its trading partners than before — a modest tightening designed to soften the blow from higher imported energy costs.
This is not a dramatic policy shift. MAS described the move as “slight” and kept all other settings unchanged. The SGD was already trading in the upper half of its policy band, suggesting markets had been anticipating the move. The message is clear: MAS is acting early to prevent the energy shock from becoming a more entrenched inflation problem, without choking off the economic growth that Singapore has been delivering.
What to watch: July's electricity tariff revision
The single most concrete near-term inflation event is the 3Q26 electricity tariff revision in July. This is when the higher global energy prices from April and May will be locked into household and business electricity bills for the third quarter. How large this adjustment is will determine whether full-year CPI-All Items stays within the 1.5–2.5% forecast band or overshoots it.
On the other side, some factors should keep inflation in check. MAS and MTI note that services unit labour costs are likely to rise more slowly in 2026 as wage growth eases from last year's levels, limiting how much businesses can pass higher costs onto consumers. Domestic spending may also turn more cautious as rising energy bills eat into household budgets, which would naturally dampen demand-side price pressures.
What this means for investors
The inflation and monetary policy picture in Singapore is manageable. Core prices are cooling, the SGD is being used as a steady, calibrated shock absorber. The main risk — energy pass-through — is well-flagged and quantifiable. This is not an inflation crisis; it is a contained adjustment to an external shock.
For Singapore equities, a stable price environment and a gradually firming SGD are broadly supportive. A stronger currency benefits companies that rely on imported inputs priced in weaker foreign currencies by reducing their input costs. Combined with Singapore's strong 1Q26 GDP growth of 6.0% YoY and the ongoing AI investment tailwind, we maintain our constructive view on the market.
For rate-sensitive sectors, S-REITs face headwinds in this environment. Despite MAS tightening through the exchange rate rather than interest rates, global borrowing costs are expected to remain elevated as inflationary pressures persist, leaving S-REITs exposed to potential cap rate expansion and near-term refinancing risks. Investors should approach S-REITs selectively, focusing on names that (1) balance sheets are healthy with lower gearing and predominantly fixed-rate debt; and (2) the underlying sub-sector has structural demand drivers that are independent of the rate cycle. We see greater resilience in names such as CapitaLand Ascendas REIT (SGX: A17U), CapitaLand Integrated Commercial Trust (SGX: C38U), Mapletree Industrial Trust (SGX: ME8U) and Stoneweg Europe Stapled Trust (SGX: SEB).
Related article: S-REITs: Rate cycle turns, sector faces renewed pressure
Singapore banks' net interest margins are more sensitive to SORA-linked rate cycles than to currency policy, leaving them broadly unaffected by the MAS move. However, we do note that the Singapore dollar’s managed appreciation framework provides a further macro stabiliser amidst oil-driven imported inflation. This reinforces its role as a wealth preservation currency and indirectly supports continued capital inflows into SGD-denominated assets. DBS, OCBC, and UOB collectively represent a significant weighting within the STI and are seeing continued inflows into wealth management mandates and fee-generating businesses as regional and global capital seeks stability. We expect safe-haven flows into Singapore to persist amidst ongoing geopolitical uncertainty. Hence, Singapore’s banking sector could continue benefiting from shifts in capital allocation and investment flows arising from the conflict environment. Among the three, we like DBS (SGX: D05) for its relatively higher forward dividend yield.
Related article: SG banks at fresh highs: The wealth hub thesis has further to run
We maintain our STI target of 5,987 by end-2028, reflecting approximately 19% upside from current levels (as of 29 May 2026) alongside an average dividend yield of approximately 5.0% till 2028. For diversified exposure to Singapore’s structural growth story, we continue to recommend the Amova Singapore Dividend Equity SGD Fund, the Amova Singapore STI ETF (SGX: G3B), and the LionGlobal Singapore Trust Fund (higher small and mid-cap exposure).
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