Singapore's Botanical Gardens.
According to local media reports, many farms in the region have had to increase water consumption significantly because of the dry weather, raising costs that could be passed onto consumers.
Singapore's annual inflation rate eased to 1.4 percent in January, the lowest in almost four years.
Worries about the impact dry weather will have on palm oil from Malaysia and Indonesia, the world's two biggest producers of the commodity, meanwhile pushed up prices to 18-month high this week.
'This is a dry period of unprecedented proportion and intensity,' said John Baker, CEO of Singapore-based First Agriculture Holdings.
( Read more: Asian cities most at risk of extreme weather)
'The market is definitely factoring in a degree of tightness down the track once this climate event translates into reduced production on the ground, which I am sure it will do,' he said, adding that the dry weather had implications for other commodity prices such as rubber.
Analysts said that they anticipated the overall impact on Singapore's economy to be limited for now, partly because the city-state has not yet turned to water rationing as Malaysia did last month.
Singapore's water consumption has gone up about 5 percent during the dry spell but there is no need for water rationing at this point, the country's environment minister said last week.
'Singapore is coping with the dry weather,' said Hak Bin Chua, an economist at Bank of America Merrill Lynch (BoAML). 'The government had been forward looking when it comes to water supplies and although the dry spell has been long, there's no need for water rationing yet.'
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