Chart of the Day: Here are Singapore's 2 biggest inflation drivers

February inflation jumped to 4.9%.

According to Nomura, in line with the weaker-than-expected growth momentum, underlying inflation pressures are also likely easing, beyond the significant effects of recent administrative measures.

On a headline basis, CPI inflation jumped to 4.9% y-o-y in February from 3.6% in January, exceeding expectations (Consensus: 4.1%; Nomura: 3.9%).

This uptick was mainly driven by higher food (2.3% y-o-y from 1.0% in January) and transportation costs (13.9% from 8.5% in January).

Here's more from Nomura:

While the former was expected owing to the lunar new year falling in February this year versus January last year, we underestimated the impact of the latter.

Transportation costs were pushed higher by private road transport costs, which increased sharply by 17.4% y-o-y in February from 10.5% in January, despite the fall certificate of entitlement (COE) prices in February2.

According to the press release, this was “due to the spike in COE premiums in January, which was exacerbated by the low base a year ago when premiums declined”, suggesting that COE prices affect CPI inflation with a lag.