Inflation in Singapore hit a 13-year high of 4.4% in June, a 0.8% increase from the previous month.Ore Huiying | Getty Images News | Getty ImagesLow-income earners in Singapore will face the lowest growth in wages and the biggest jump in household expenses as inflation rises, new research by the country's largest lender has shown.Wages for those earning less than 2,500 Singapore dollars ($1,815) a month rose by only 2.5% between May last year and this year, the study showed.That's lower than the country's average consumer price index inflation of 5.2% in the first half of 2022.In contrast, customers earning S$5,000 to S$7,499 had wage increases of 11.1%, and those paid S$10,000 and above received a 13.6% raise in the same period, the report stated."Customers earning below S$2,500 are usually elderly residents who have a lower earning capability or workers who are in lower skilled professions," said Irvin Seah, senior economist at DBS Group Research.The survey of 1.2 million DBS retail customers showed that despite improvements in salary and employment benefits, the income of nearly half of the respondents fell behind inflation.However, Seah said low wage earners receive government financial support, which creates more disposable income for this group of workers.If the bank included customers upward income mobility, which refers to a person's income progressively increasing over the course of their life, "then overall income growth for the lower income group would be more encouraging at 19.2% year on year," Seah told CNBC in an email.Growing expensesOn top of slower wage growth, those in the lower-income group face increasing expenses, which have risen by a bigger factor than those with higher salaries.Expenses for Singaporeans earning less than S$2,500 grew 13.8% between May 2021 and May this year —5.6 times more than their income growth of 2.5%, the study showed.For Singaporeans earning S$5,000 to S$7,499, expenses grew 2.2 times faster than their income growth of 11.1%. Those earning S$10,000 and above saw their expenses increase 1.8 times faster than their income growth of 13.6%, the bank said."Expenses for the higher income is rising at twice the speed of their income growth [versus 5.6 times] for the lower income. Such [a] trend for the lower income is obviously not sustainable unless there is significant improvement in income growth or upward income mobility," Seah said.Spending habitsRising inflation and the economic reopening from the pandemic have led to an increase in household expenses.DBS said its customers are now spending 64% of their income, up from 59% a year ago.Expenses for millennials (those between 26 and 41 years old), who have been spending more as the economy reopened after Covid restrictions were eased, rose by almost 30% over the past year.The growth in expenses for baby boomers (58 to 76 years old) was smaller.A majority of baby boomers are retirees and "hence, on an aggregate basis, the income growth would be naturally lower," Seah said.There was double-digit growth across all spending categories. The biggest growth in expenses was observed in transportation, shopping, entertainment and food.Inflation outlook Inflation in Singapore hit a 13-year high of 4.4% in June, a 0.8% increase from the previous month.Seah said inflation could peak in the third quarter of the year and ease in November.High prices will stick around the next two to three years but the inflation rate will slow, he adds.
Singaporeans with low incomes continue to face the lowest wage growth, DBS says.