US Inflation to Eases from Oil Price Impact in 2027: DBS

DBS Chief Investment Officer for North Asia Yeang Cheng Ling believes that the impact of rising oil prices on US inflation will ease in 2027. The reason is a normalization of supply and demand conditions, which has already led to high oil prices.

Rising oil prices have been a significant contributor to US inflation over the past year, with prices up by around 50% from last year's levels. However, current US consumer price inflation assumptions are based on oil prices of around USD 100 per barrel, which is already above the current level.

Cheng Ling pointed out that Saudi Arabia's oil exports have returned to average daily levels in 2025, indicating a normalization of supply. He also noted that markets had priced in one more rate hike in 2026, but predicting the Fed's policy path has become more difficult.