Inflation stayed muted last month as the cost of food and services rose more slowly and car prices fell - but increases are looming.
Prices across the economy are expected to pick up in the months ahead, due in part to the stronger economic outlook.
The consumer price index - the main measure of inflation - edged up 0.2 per cent in March compared with the same month last year, according to Department of Statistics data released yesterday. This was below February's 0.5 per cent rise and also below economist estimates of a 0.5 per cent increase.
Services inflation slowed to 1.4 per cent last month from 1.9 per cent in February, mainly reflecting smaller increases in airfares and holiday expenses from a year earlier.
Private road transport costs also fell, down 0.6 per cent last month, reversing the 0.6 per cent rise in February.
This was due to lower car prices after a decline in certificate of entitlement premiums.
Food inflation dipped to 1.4 per cent last month from 1.5 per cent in February, due to a smaller increase in the prices of non-cooked food items and prepared meals.
Core inflation - which strips out accommodation and private road transport costs to better gauge everyday expenses - eased to 1.5 per cent last month from 1.7 per cent in February, reflecting lower services inflation.
The brighter global economic outlook could push up imported inflation in the coming months, the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) said in a joint statement.
Still, despite "sporadic spikes" in oil prices earlier in the year, they should ease in the quarters ahead "as supply remains responsive".
Faster wage growth and strengthening domestic demand could also push up price levels across the economy in the months ahead, the MAS and MTI noted.
In addition to the pick-up in economic growth, anticipated hikes in public transport fares and Changi Airport's upcoming fee increase could also lift transport and recreation costs in the months ahead, said Maybank Kim Eng economist Chua Hak Bin.
Water charges will rise again in July. But the recent liberalisation of the retail electricity market could offset these pressures and help keep utility costs in check, he added.
Economists noted that this year's stronger inflation outlook is in line with the central bank's decision earlier this month to return the Singapore dollar to a "modest and gradual appreciation path".
The move allows the dollar to strengthen gradually against a basket of currencies of major trading partners, making imports cheaper in Singapore dollar terms.