Singapore’s consumer price index (CPI) rose 1.4% year on year in January. This was up from 1.2% in the previous month.
The data shows inflation increased by 0.2 percentage points compared with the prior reading. No further breakdown was provided.
Implications For Mas Policy
This uptick in January’s inflation to 1.4% year-over-year is a signal that disinflationary pressures may be easing. For weeks we have been positioned for a neutral Monetary Authority of Singapore (MAS), but this data forces a reassessment. The market is now beginning to price out the possibility of any policy easing at the upcoming April 2026 meeting.
We believe the most direct response is in interest rate derivatives, specifically selling 3-month SORA futures contracts. This position benefits if short-term interest rates rise, which is the likely outcome of a more hawkish MAS. We saw a similar dynamic in 2025 when a surprise inflation print in the third quarter caused a sharp sell-off in these contracts.
This inflation figure also reinforces our bullish view on the Singapore Dollar, as the MAS uses the currency’s exchange rate band as its main policy tool. We are looking to buy SGD call options against the USD, anticipating the central bank will favor a stronger currency to curb import prices. Historically, during the 2022-2023 tightening cycle, the SGD strengthened by over 5% against the dollar as the MAS adjusted its policy band five consecutive times.
On the equity front, sustained inflation and the potential for a firmer monetary policy create headwinds for the Straits Times Index (STI). Higher interest rates can dampen corporate earnings and economic activity, which we saw suppress the index throughout much of 2025. We are considering buying put options on the STI as a portfolio hedge against a potential downturn leading into the second quarter.
