Singapore's annual inflation held at a lower-than-expected 7.5 percent in May, still hovering at a 26-year high and keeping pressure on the central bank to maintain its tight monetary policy.
From the previous month, May consumer prices rose 0.3 percent after seasonal adjustments, the Department of Statistics said in a statement on Monday.
Economists said the Monetary Authority of Singapore (MAS), the central bank, will probably stick to its tight policy stance, aimed at curbing imported inflation, at its next meeting in October.
"It's a growth versus inflation dilemma, but April's tightening should be adequate for now," said Song Seng Wun, a CIMB economist.
The MAS steers monetary policy by managing the Singapore dollar within a secret trading band against a basket of currencies, rather than by adjusting interest rates. It tightened policy in April by moving the centre of the band up, its most aggressive move since the 2003 SARS outbreak to tame inflation.
The Singapore dollar was trading at 1.3647 against the U.S. dollar, compared with 1.365 before the data. Song expects the Singapore dollar to trade at 1.30 versus the U.S. dollar by year-end.
The annual rate of increase in consumer prices in May, a result of higher costs of food, transport, communication and housing, matched the pace seen in April, which was also 7.5 percent.
Economists expect consumer prices to rise further in the months ahead as fuel price increases in Malaysia and Indonesia, major exporters to Singapore, raise the costs of food and raw materials.
Most economists had expected consumer prices in May to rise 7.8 percent from a year earlier -- the fastest pace since February 1982 when they rose 9 percent -- due to high energy and food prices.
Central banks across the world from China to the United States are fighting accelerating inflation as higher oil and commodity prices push up consumer prices.
A sub-index for housing costs in May rose 12.4 percent from a year earlier while food prices, which carry the largest weighting in the index at 23 percent, increased 9 percent.