Are you losing the race against inflation?
As Singapore recovers from the COVID-19 pandemic, high inflation has thrown a new spanner in the works. Who is most vulnerable to inflation and how can you beat it?
Group Research - Equities1 Aug 2022
  • Singapore’s inflation rate has reached a new high since the Global Financial Crisis period
  • High inflation is chipping away income growth and consumers’ purchasing power
  • Lowest income group and Boomers are more vulnerable to high inflation
  • Excess cash, if uninvested, is at risk of seeing its value erode during periods of high inflation
  • To stay ahead of inflation, it is important to exercise sustainable financial planning and investing
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As Singapore’s recovery from the COVID-19 pandemic continues, new challenges have emerged. High inflation has thrown a new spanner in the works. Singapore’s headline consumer price index (CPI) and core inflation rate reached 6.7% and 4.4%, respectively, in June 2022 – the highest since the Global Financial Crisis. High inflation is chipping away income growth, eroding the value of money and consumers’ purchasing power. This is further complicated by the changes in consumption patterns arising from the reopening of the economy – such pent-up spending against a backdrop of high inflation could have significant implications on financial wellness.

Inflation affects everyone differently. In this report, we analysed the aggregated and anonymised database of about 1.2 million of our non-wealth customers in May 2022, relative to the same period last year, to shed light on the impact of high inflation rates on our customers’ financial wellness. Our analysis examines whether income growth across different segments of society has kept up with inflation, and how changes in expenditure patterns would make some groups more vulnerable to the impact of inflation. We found the lowest income group and Boomers are more vulnerable to high inflation, based on their low income growth, rapid increase in expenses relative to income, and tighter wallet bandwidth.

Don’t lose your cash to inflation. The value of money declines more rapidly during periods of high inflation. The rate of inflation outpaces that of the returns earned on bank deposits, translating into negative real returns on cash. Excess cash, if uninvested, is at risk of seeing its value erode during periods of high inflation.

To stay ahead of inflation, it is important to exercise sustainable financial planning and investing. It will be prudent to review our budget and reduce discretionary spending. It may also be wise to ensure adequate emergency cash and insurance to mitigate risks, as well as invest excess cash to generate returns to ease the impact of inflation. Doing so will enable us to get more bang for our buck, beat inflation and achieve short- and long-term goals like financial freedom.


Note: All views expressed are current as at the stated date of publication.

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HONG KONG
DBS Bank (Hong Kong) Ltd
Contact: Dennis Lam
13th Floor One Island East,
18 Westlands Road,
Quarry Bay, Hong Kong
Tel: 852 3668 4181
Fax: 852 2521 1812
e-mail: [email protected]

SINGAPORE
DBS Bank Ltd
Contact: Andy Sim
Marina Bay Financial Centre Tower 3
Singapore 018982
Tel: 65 6878 8888
e-mail: [email protected]
Company Regn. No. 196800306E



INDONESIA
PT DBS Vickers Sekuritas (Indonesia)
Contact: Maynard Priajaya Arif
DBS Bank Tower
Ciputra World 1, 32/F
Jl. Prof. Dr. Satrio Kav. 3-5
Jakarta 12940, Indonesia
Tel: 62 21 3003 4900
Fax: 6221 3003 4943
e-mail: [email protected]



THAILAND
DBS Vickers Securities (Thailand) Co Ltd
Contact: Chanpen Sirithanarattanakul
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9th, 14th-15th Floor
Rama 1 Road, Pathumwan,
Bangkok Thailand 10330
Tel. 66 2 657 7831
Fax: 66 2 658 1269
e-mail: [email protected]
Company Regn. No 0105539127012
Securities and Exchange Commission, Thailand