Surging COE premiums to drive inflation in the coming months

The hike may be due to the government's target to decrease car population growth rate from 1.5% to 0.5% per annum.

According to DBS, the government’s unwavering determination to bring car population growth rate down to 0.5% per annum, from 1.5% previously, as well as the continued high demand for private vehicles are the reasons behind the surge in COE premiums.

Here's more from DBS:

Glitches in public transportation have further compounded the increase in demand for private transportation. Plainly, higher COE premium will remain a key driver of inflation in Singapore in the coming months. Concomitantly, oil prices have continued to stay around the USD 120/bbl level. Given these two factors, expect transport CPI to play a big role in keeping the headline inflation reading at about the 5% mark in the coming months.