Singapore's February retail sales likely to slip 3.4%

But it's just the tip of the iceberg.

According to DBS, retail sales figure for Feb13 is on tap today. Market is looking for a 3.4% YoY drop and a 1.2% MoM sa decline. Plainly, the headline number would have been rosier if not for the drag from motor vehicle sales. 

COE premiums were still very high back in February. Though the Lunar New Year festive buying may provide some boost, the high COE premium is the key factor weighing down on the headline number.

Here's more from DBS:

This is probably why market expects ex-motor vehicle retails sales to bounce back to positive growth (consensus: 4.0%) after having contracted by 4.9% in the previous month.

Minus away the effect of the high COE premium, a tight labour market and the improving economic conditions are supportive of consumer expenditure. Indeed, ex-motor vehicle retail sales are expected to remain fairly healthy in the months to come but the same can’t be said of the overall retail sales figure.

February’s decline is likely to be the tip of the iceberg on what lies ahead for retail sales if one factors in the downside impact of the recent curbs on car financing on overall sales.

Though the recent changes in policies have led to some corrections in the COE premiums, consumers are essentially staying on the sideline awaiting for car prices and COE premiums to fall further. And this will surely affect the overall sales figure.