Surprise, surprise: Singapore's June inflation ducked to a 3-month low of 1.8%

All thanks to private road transport cost.

Everyone was in for a pleasant surprise as consumer prices crept down to a 3-month low of 1.8% in June. Numbers point to the private road transport cost's mini jump and housing costs' continuous easing.

According to UOB Flash Note, Singapore’s June consumer price inflation unexpectedly eased below 2%y/y, coming in at a 3-month low of 1.8%y/y from 2.7% y/y in May, and way below consensus forecast of 2.4% y/y. On a non-seasonally adjusted sequential basis, June consumer prices declined 0.7% m/m following a 0.5% increase in May.

Here's more from UOB Flash Note:

Core inflation (which excludes housing and private road transport) moderated slightly further to register 2.1% in June, compared to 2.2% y/y a month ago. Headline inflation averaged 1.9% while core inflation averaged slightly higher at 2.1% in 1H 2014.

Private road transport cost was the main reason for the significantly modest June headline inflation outcome as it rose by just 2.8%y/y, down from 8.1% y/y in May and 5.7%y/y in April (attributed to the lower COE premiums in May 2014 which showed its effects in the following month) while housing costs pressure continued to ease, increasing by just 0.2%y/y, down from 0.5%y/y in May (reflecting the large supply of newly-completed housing units and continued effects of the existing housing cooling measures).

Inflation in other major categories within the consumption basket either moderated slightly or even declined at a slightly faster pace compared to a month ago.

The exceptions were the food item price which rose faster by 3.2%y/y (from 3% in May), the fastest monthly increase since Jan 2012 while healthcare costs was kept at an elevated pace of 3.2%y/y (unchanged from May) but it is still notably lower compared to the average monthly increases experienced by this price segment since Jan 2012.

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