Chart of the Day: Singapore inflation higher than Asia's average

Singapore's nipping foreign labour inflow policy may warrant a review, says DBS.

According to DBS, high inflation in recent years is mainly made in Singapore and this has affected overall competitiveness. High COE premiums and rentals, as well as the continued increase in labour cost are the key drivers. Ironically, the bulk of these were policy-induced, it said.

"The tightening in foreign labour inflow in particular, is creating significant strain on enterprises and eroding Singapore’s cost competitiveness. The near- term impact is higher labour costs, compression of profit margins and the tendency for companies to pass on this higher cost to consumers, resulting in higher inflation. Thus, in a bid to restructure the economy, growth and competitiveness have been affected, and just when the global cycle is weak," it added.