COE prices down 2.9% in June

Prices for the open category eased to SGD84,389 from SGD86,889.

Contribution of private road costs to headline inflation remained elevated at 0.7pp in June, says Nomura.

In the second tender on June 20, prices of certificates of entitlement (COE) in the “open category” eased to SGD84,389 from SGD86,889 in May, a drop of 2.9% m-o-m.

COE prices have eased from the highs of April and May but, so far, only marginally.

Here's from Nomura analyst Euben Paracuelles:

The contribution of car prices to headline inflation is reflected in “private road transport (excluding fuel)”,
which has a weight of 9.2% in headline CPI.

We estimate that the contribution of private road costs to headline inflation therefore remained elevated at 0.7pp in June from 1.0pp in May and 0.8pp in April.

This should keep headline inflation well above 5% throughout Q2.

In the latter half of the year, however, we expect that the recent announcements aimed at improving COE
supply should help bring down private transportation costs.

Importantly, the decline in imported inflation should also contribute significantly. We reiterate our 2012 inflation forecast of 4.8%, implying CPI inflation averaging 4.5% in H2 2012 from 5.1% in H1.