Chart of the Day: Inflation predicted to drift below 1.5% in May

On the back of COE premiums decline.

According to CIMB, 1Q13 CPI averaged 4.0% yoy, unchanged from 4Q12, with the MAS’s core CPI down to a 3-year low of 1.6% yoy (2.0% in 4Q12). May’s CPI may drift below 1.5% yoy on the back of further declines in COE premiums in Apr even though housing costs could rebound in the absence of S&CC rebates.

Here's more:

Even if COE premiums stabilise, the impact on headline CPI could still be striking in the coming months. While the MAS now expects inflation to ease to 3-4% in 2013 (4.6% in 2012; earlier projection being 3.5-4.5%) on recent restrictions on car loans, more moderate rises in rental reversions plus higher bases, we expect headline CPI to subside to 2-2.5% (previous forecast: 3.3%).