Singapore’s inflation is expected to edge higher in March 2026, driven mainly by imported energy costs following conflict in the Middle East, according to DBS Group Research.
Headline and core inflation set to rise
DBS projects core inflation to increase to 1.6% year-on-year in March, with headline inflation at 1.8%. Both would be up from February’s readings of 1.4% for core inflation and 1.2% for headline inflation.
The research notes that higher global crude oil, refined fuel and gas prices are flowing through import channels into domestic prices. Transport-related categories, particularly private transport and airfares, are seen as the main drivers of the uptick.
Inflation pressures remain concentrated in energy-linked sectors
Despite the energy shock, DBS highlights that electricity, gas and food prices in Singapore have stayed relatively stable so far.
This suggests that the rise in inflation is still concentrated in energy-sensitive segments, rather than indicating a broad-based price surge across the economy.
Monetary Authority of Singapore tightens policy
The Monetary Authority of Singapore (MAS) has already moved to counter these pressures. On April 14, it slightly increased the rate of appreciation of its Singapore dollar policy band, effectively tightening monetary conditions to offset rising import costs.
Alongside this move, MAS raised its official 2026 inflation forecast to a range of 1.5% to 2.5%, signalling that it expects the current cost pressures to persist rather than fade quickly.
Global energy shock feeds through from Strait of Hormuz
The inflation outlook is being shaped by developments in global oil markets. Disruptions to shipping through the Strait of Hormuz have temporarily constricted close to 20% of global oil supply, pushing Brent crude prices to an average of about US$103 per barrel in March.
Although a fragile ceasefire has since pulled spot prices back below US$100, the U.S. Energy Information Administration expects Brent to average around US$115 per barrel in the second quarter before potentially easing later in the year. The forecast remains highly contingent on how long the conflict and related disruptions last.
Policy moves reshape market conditions
This external price shock is adding complexity for those managing capital, particularly in assets sensitive to inflation and interest rates. MAS’s stronger currency stance is aimed at cushioning the domestic economy from imported inflation, but it also shifts the return profile of foreign assets and currency pairs.
An environment where central banks are explicitly targeting price instability tends to weigh on assets that depend on low borrowing costs. Persistently high energy prices could also squeeze margins in fuel-intensive sectors, including transportation and manufacturing, over the coming quarters.
Slowing global growth adds to policy challenge
The inflation pulse is emerging against a weaker global backdrop. The International Monetary Fund has cut its global growth forecast for 2026, citing the economic fallout from the Middle East conflict and warning that a further escalation could push the world closer to recession.
The combination of slower growth and higher prices poses a challenge for capital allocators, as traditional relationships between asset classes can become less reliable in such an environment.
Federal Reserve signals caution on rate cuts
The U.S. Federal Reserve is also reassessing its stance. Minutes from its March meeting show rising concern over upside inflation risks, prompting markets to push back expectations for U.S. rate cuts toward the end of the year.
This global shift away from near-term monetary easing underpins a more cautious tone across markets. Traders are increasingly focused on strategies that can withstand a period of sustained inflation and potential economic slowdown, while closely watching Singapore’s March CPI data for further confirmation of the trend.
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