Consumer inflation in Singapore eased to 5.1 percent in May from 5.7 percent in April, hitting the slowest pace of increase since February 2022, when the overall consumer price index rose 4.3 percent on the year. The CPI rose 0.3 percent on the month after rising 0.1 percent the previous month.

The Monetary Authority of Singapore's preferred measure of core inflation, which excludes the cost of accommodation and private road transport, slowed to 4.7 percent in May from 5.0 percent seen in the previous two months. The core CPI edged up 0.1 percent following a 0.4 percent gain.

The year-over-year increase in food prices decelerated to 6.8 percent in May from 7.1 percent in April while the increase in transport costs slowed more sharply to 6.0 percent from 8.6 percent. Clothing and footwear prices rose 4.1 percent, slower than 5.6 percent previously.

In April, MAS predicted that its core inflation measure"will remain elevated in the next few months" but that it"should progressively ease in the second half of 2023 and end the year significantly lower."

The central bank has assessed that the current appreciating path of the Singapore dollar nominal effective exchange rate policy band is"sufficiently tight and appropriate" for securing medium-term price stability.

Singapore's annual consumer inflation rate is expected to ease slightly to 5.5 percent in May after rising to a higher-than-expected 5.7 percent in April from 5.5 percent in March.

The Consumer Price Index (CPI) measures the average price changes in a fixed basket of consumption goods and services commonly purchased by the resident households over time. It is commonly used as a measure of consumer price inflation.

The CPI is rebased once every five years to reflect the latest consumption patterns and composition of goods and services consumed by resident households. The weighting pattern for the 2014-based CPI was derived from the expenditure values collected in the Household Expenditure Survey (HES) which was conducted from October 2012 to September 2013. These expenditure values were updated to 2014 values by taking into account price changes between 2012/13 and 2014.

The CPI covers only consumption expenditure incurred by resident households. It excludes non-consumption expenditures such as loan repayments, income taxes, purchases of houses, shares, and other financial assets etc.

An investor who understands how inflation influences the markets will benefit over those investors that do not understand the impact. Inflation is an increase in the overall prices of goods and services. The relationship between inflation and interest rates is the key to understanding how indicators such as the CPI influence the markets and your investments.

Inflation (along with various risks) basically explains how interest rates are set on everything from mortgages and auto loans to government securities. As the rate of inflation changes and as expectations on inflation change, the markets adjust interest rates. The effect ripples across stocks, bonds, commodities and your portfolio, often in a dramatic fashion.

By tracking inflation, whether high or low, rising or falling, investors can anticipate how different types of investments will perform. Over the long run, the bond market will rally (fall) when increases in the CPI are small (large). The equity market rallies with the bond market because low inflation promises low interest rates and is good for profits.