Oil Price Impact on US Inflation to Ease Next Year: DBS

DBS Chief Investment Officer for North Asia Yeang Cheng Ling believes that the impact of rising oil prices on US consumer price inflation will ease in 2027 as supply and demand conditions normalize.

Oil prices have risen by about 50% from last year, while current US consumer price inflation assumptions are based on oil prices of around $100 per barrel. However, Cheng Ling notes that the high base set in 2026 will reduce the impact of any further increase in oil prices on inflation next year.

'The delta effect of oil going forward should not repeat into 2027,' Cheng Ling said. 'Because of the high base already set in 2026, oil prices are already at $100 a barrel.'

He added that DBS does not expect oil prices to rise by another 50% from current levels, citing normalization in both demand and supply.