The consumer price index (CPI) in Singapore rose 1.8 percent in June year-on-year, down from 2.7 percent in May, mainly on account of a more moderate increase in car prices, according to figures released by the Department of Statistics on Wednesday.

Private road transport cost edged up by 2.8 percent in June, a smaller rise compared to the 8.1 percent surge a month earlier, largely due to the sharp correction in Certificate of Entitlement (COE) premiums in May, according to the report by the Monetary Authority of Singapore (MAS) published on the same day.

Services inflation eased to 2.2 percent from 2.5 percent in the preceding month, owing to lower contributions from the cost of holiday travel, telecommunication and medical insurance.

Food inflation came in at 3.2 percent, reflecting steeper price increases of both non-cooked food items and prepared meals.

Accommodation cost increased at a slower pace of 0.5 percent compared to 0.9 percent in May, as imputed rentals on owner- occupied accommodation (OOA) picked up more modestly.

And the core inflation, which excludes the cost of accommodation and private road transport, inched down to 2.1 percent in June from 2.2 percent a month ago, as the steeper increase in food prices was more than offset by the decline in services inflation, the report said.

Looking ahead, MAS said the overall inflation is expected to ease in the second half of 2014 due to lower imputed rentals on OOA and car prices. Therefore, CPI is expected to come in at between 1.5 to 2.5 percent in the second half of the year.

As to the core inflation, MAS pointed out that domestic cost pressures, particularly stemming from a tight labor market, are likely to remain the primary source of inflation. Consequently, MAS estimates that the core inflation is projected to stay elevated at 2 to 3 percent in 2014.