How stiffer car buying rules will affect Singapore's inflation

Now that COE premiums sharply dropped.

According to DBS, tighter financial terms on car purchases introduced by the MAS earlier have hit car demand, resulting in the sharp declines in the COE premiums. 

This is expected to have a strong knock-on effect on the headline inflation figure, which has since moderated significantly from the pre-tightening high of 4.9% in February.

Here's more from DBS:

We expect inflation to hover around the 3% level in the coming months before the build-up in wage pressure drives it higher by the end of the year. 

In addition, the industrial production index for April is not going to look great. Production output probably has increased by 1.6% YoY, up from -4.1% in the March.

While this is the first expansion in three months, that’s largely on account of the low base last year. In fact, a sequential decline is expected judging from the sharp pullback in pharmaceutical exports in the month.

Despite a modest improvement in the electronics exports, the pharmaceutical segment saw a drastic 28.5% MoM nsa drop in exports.

This likely suggests another synchronised plant shutdown, which will naturally have an impact on the overall industrial production output.