Singapore's central bank said on Tuesday headline and core inflation this year are likely to be at the lower end of its earlier forecasts, but it expects prices to pick up in 2016.
The Monetary Authority of Singapore, said core inflation is expected to be in the lower half of its 0.5-1.5 percent range.
MAS Managing Director Ravi Menon said Singapore is "not facing deflation" as price declines have been neither persistent nor pervasive.
MAS, which on Tuesday released its annual report, said it is reviewing its forecast for economic growth this year. The current forecast is for gross domestic product to expand 2-4 percent.
The annual report comes after government data released last week that showed Singapore's economy contracted in the second quarter.
The lacklustre growth performance, coupled with a drop in annual core inflation to a five-year low of 0.1 percent in May, has put renewed focus on the possibility of a further easing of monetary policy later this year.
Menon said that Singapore's current policy stance remains "appropriate" for ensuring medium-term price stability.
In January, the MAS surprised markets by easing policy in an unscheduled decision, saying a plunge in commodity prices had significantly altered the inflation outlook.