Chart of the Day: High COE premiums make Singapore’s inflation worst in SEA apart from Vietnam

COE premiums rose from a low of SGD5000 to SGD90,000 in just a matter of 3 years.

Here’s more from DBS Group Research:

Average inflation over the last three decades has been 1.8%, which is about one-third of the current inflation rate. Indeed, Singapore currently has the worst inflation profile amongst the key Southeast Asia economies, apart for Vietnam. This is unusual for a country that has historically been used to exceptionally low inflation.

Sky-high COE premium continues to be one of the key culprits. Even if the Land Transport Authority has announced plan to release slightly more COE into the market going forward, a massive pent-up demand for private vehicles has been created by the high COE premiums over the last two years. Any increase in quota will easily be superseded by the existing excess demand with little impact on the premium levels. Plainly, high COE premium will remain a key driver of inflation in Singapore going forward.