Rise in Inflation: Some Asian Countries Take Measures

Governments in Asia have increased their efforts to manage food prices and offer additional relief to families affected by rising inflation caused by ongoing Russia-Ukraine conflict.

Malaysia is projected to spend roughly $17.5 billion on subsidies this year, including the recently announced $83 million in chicken and egg subsidies, to keep inflation under control.

Finance Minister Zafrul Abdul Aziz said on June 30 that Malaysia’s inflation rate could increase by 11.4 percent in May, but the subsidy policy has helped keep inflation at 2.8 percent, the state-run outlet Bernama reported.

Zafrul said the country’s open economy was hurt by global inflationary pressures, with Brent crude oil prices rising to $100 per barrel and disruptions in the global supply chain, resulting in an increase in food prices.

The Malaysian government will provide an additional $142 million in cash assistance to protect the low-income families “from the burden of the rising cost of living,” he said.

Singapore

Singapore’s government unveiled a $1 billion support package on June 21 to provide immediate relief for lower-income groups and help local companies sustain their businesses and workforce.

According to local reports, the country’s core inflation rate rose to 3.3 percent year-on-year in April, the highest rate since January 2012, when it reached 3.5 percent.

Singapore’s Finance Ministry said the ongoing Russia-Ukraine war and the COVID-19 restrictions in some countries had disrupted global supply chains, resulting in higher energy and food prices.

” It is probable that global inflation will continue to rise for a while and could even get worse before stabilizing and getting better. Likewise in Singapore, we must brace ourselves for higher prices over the next few months,” the ministry said in a statement.

Japan

Japan allocated $48 billion to fund subsidies and provide cash payouts to low-income households as part of efforts to cushion the economic blow from rising fuel and raw material prices.

In April, the country’s core inflation rate was 2.1%. Budget allocations will cover government spending on tackling rising fuel prices, as well as ensuring steady supplies of food, energy and raw materials.

Tokyo relies on both a generous fiscal stimulus and an ultra-easy monetary policy to help the economy. This is a stark contrast to shifts in interest rates that have been seen elsewhere, including the United States.

Thailand

Thailand extended its relief measures for three months to September, including a monthly subsidy of 100 baht ($2. 83) for cooking gas, and freezing vehicle gas prices for taxi drivers.

The measures came as Thai headline inflation hit a near 14-year high of 7.1 percent in May, driven by rising oil prices.

The government will seek out refineries and gas separation facilities to make some money for the state oil fund, Thanakorn Wangboonkongchana stated.

Thanakorn stated that tax deductions would be made for expenses related to exhibitions and seminars between July and Dec and that a current scheme that allows locals to travel within the country would be extended to October.

Reuters contributed to this report.

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