DBS Forecasts Easing Oil Price Impact on US Inflation by 2027

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

Rising oil prices have increased by around 50% from last year, with current US consumer price inflation assumptions based on an oil price of $100 per barrel. However, Cheng Ling points out that the high base set in 2026 means the impact of further increases in oil prices will be reduced next year.

The delta effect of oil going forward should not repeat into 2027 because of the high base already set and the normalizing demand and supply backdrop, according to Cheng Ling. He notes that Saudi Arabia's oil exports have returned to average levels, indicating a return to normalcy in the oil market.