Rising labour costs may heighten inflation: DBS

Inflation expectation could be a concern when workers demand for higher wages to cope with the rising inflation.

According to DBS, rising labour costs on the back of a tighter labour market and hikes in foreign work levies will likely exert more pressure on the price index going forward. 

Risk of a wage-price spiral cannot be discounted. Externally, though a strong Sing dollar may help to fend off part of the imported inflationary pressure, some spillover effect will surely be felt with oil prices now already at USD 100/bbl level and appears to be rising further while global food prices continue to surge. With that, we continue to see strong bias towards further tightening by the MAS in the next policy review in April.