Chart of the Day: See the slump in car prices that drove CPI lower

Due to lower COE premiums.

Singapore CPI clocked 1.2% y/y, well below market expectation of 1.8%.

In a report by OCBC, the relatively tame inflation (vs June’s 1.8%) is largely driven by lower housing (-1.6% m/m) and transport (-0.4% m/m) prices, as lower housing accommodation cost and COE premiums were observed in the previous month.

Core inflation however, remained elevated at 2.2% y/y, suggesting that higher prices in non-core inflation components, such as food (+3.0%), education (+3.3%), healthcare (+3.3%) and recreation (+2.5%), are still observed..

Meanwhile, with headline inflation printing 1.6% on the year-to-date basis, further easing of housing and transport costs into the year provides significant downside risk for year-end inflation to clock below official expectation range of 1.5 – 2.5%.