Transportation costs edged down to a measly -3.5%

Thanks to dropping oil petrol prices offset by rising COE premiums.

Despite a slight improvement in its prices, the Transportation cost is still to blame for the plummeting consumer price index (CPI) of the city-state.

Although the main culprit for the said decline is the Housing & Utilities category, Transportation is to be blamed as well, with its cost still in the red at -3.5% in July, enjoying a slight ease in its cost from the recorded decline of -4.3% last month.

According to Maybank Kim Eng's report, the Private Road Transport sub-component posed an eased drop of -4.4% compared to -5.7% in June.

The report noted that this slight improvement was on back of the drop in petrol prices being offset by the rise of certificate of entitlement (COE) premiums.

"This is in addition to ongoing effect from the one-year road tax rebate for petrol vehicles (from 1 Aug 2015 to 31 Jul 2016) to ease the burden on higher petrol duties, which took effect on 23 Feb 2015," Maybank said.

The latest results from the COE bidding this month, according to the report, showed prices were mixed.

"[This] is against the expectation of higher prices due to lower COE quota for Aug-Oct
2016, as well as MAS (Monetary Authority of Singapore)’s move in relaxing the car loan restrictions," Maybank explained.

More so, the total quote for August 2016 to October 2016 at 8,613 units is a 10.6% drop from the previous quota.

"While the lower COE quota for Aug-Oct 2016 may push up COE premium, the weaker economic outlook could weigh on consumer demand for cars in coming months," the report warned.