The consumer price index held steady last month after rising an annual 0.4 percent in April, the Department of Statistics said in a report.

Consumer prices fell 0.2 percent in May from April as the cost of transport and clothing fell.

The Monetary Authority of Singapore has allowed the island's currency to strengthen over the past year to help cool inflation by reducing the cost of imported goods.

Signs that price pressures are easing may lead to a change in the central bank's policy, said several analysts, including Nigel Rendell at CLSA in Singapore.

"There's no inflation, growth is weak, exports are weak," Rendell said.

The central bank "would have little alternative" to abandoning its currency strategy, Rendell said, though he added that the MAS was unlikely to act before its next policy meeting in September or October.

The MAS seeks to prevent the Singapore dollar from rising or falling outside an undisclosed band based on a basket of currencies of its biggest trading partners.

The central bank uses the level of the Singapore dollar, rather than interest rates, to control monetary conditions.

The dollar has risen by about 3 percent against its US counterpart in the past 12 months.

The MAS said in April that inflation this year might exceed its forecast of 1 percent or less, as high oil prices made imported goods more expensive.

Singapore's economy shrank at a 5.5 percent annual rate in the first quarter, prompting the government to cut its 2005 growth forecast to as low as 2.5 percent.

The economy grew 8.4 percent last year. Exports unexpectedly fell in May as companies shipped fewer computer chips and pharmaceuticals to the United States and Europe.

Non-oil domestic exports fell a seasonally adjusted 5.3 percent from April, when they gained 4.6 percent, International Enterprise Singapore, the trade promotion body, said this month.

"Economic growth has slowed down since late last year and that's kept prices down," said Sim Moh Siong, an economist at Citigroup in Singapore, ahead of the inflation report.

"Car prices have come off since the beginning of the year," reducing the impact of transport costs on consumer prices.

The statistics department report Thursday said that food prices, which make up 23 percent of the index, rose 1.7 percent in May from a year earlier, the same annual rate of increase as in April. From April, food prices gained 0.1 percent.

Prices of clothes and footwear fell 0.6 percent from a year earlier and dropped 2.7 percent from April.

Education and stationery prices rose 1.7 percent from a year earlier, and were unchanged from April. Transport and communication costs, which account for 22 percent of the index, the second biggest category, fell 2.9 percent from a year earlier and dropped 0.5 percent from April. Housing costs, the third biggest component after food and transport, fell 0.4 percent from a year earlier and were unchanged from April.

Health care costs rose 0.4 percent from a year earlier and fell 0.1 percent from April.

On a seasonally adjusted basis, the consumer price index was unchanged from April, the report said. Consumer prices rose 0.2 percent in the first five months of the year compared with the same period in 2004, the report said.

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