Singapore’s core inflation eased in March on lower food prices and cost of services, with the disinflationary trend expected to continue, barring any supply shocks from geopolitical tensions.

Gains in the core measure, which excludes housing and private transportation costs, slowed to 3.1% last month from a year ago, official data showed on Tuesday. That was lower than the median 3.5% expected in a Bloomberg survey of economists, and compares with a seven-month high of 3.6% in February. 

Headline inflation slowed to 2.7% from 3.4% in February. That was the lowest in 30 months and compares with a 3.1% median in the Bloomberg survey.

The March readings provide a reprieve to the Monetary Authority of Singapore (MAS), which elected to extend its policy pause earlier this month, amid expectations for inflation to step down by the fourth quarter and momentum to build in the trade-reliant economy. The authority will next review policy in July.

The MAS and Singapore’s Ministry of Trade and Industry (MTI) retained their forecasts for both core and all-items inflation to average 2.5%-3.5% this year.

That outlook faces risks from geopolitical shocks and adverse weather events, which could put upward pressure on global energy and food commodity prices, as well as shipping costs, the central bank and the MTI said in a joint statement on Tuesday.

The MAS, which uses the exchange rate instead of interest rates to stabilise prices, has kept the local dollar on an appreciating path to blunt imported inflation. But it needs to ensure that the Singapore dollar doesn’t appreciate to a level where it starts hurting exports.

  - Bloomberg