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Asian countries take steps to fight soaring inflation


Countries across Asia are taking measures to tackle soaring inflation as the Russian invasion of Ukraine continues to have a domino effect on supply chains already disrupted amid the pandemic.

Malaysia

In Malaysia, where food inflation is at an 11-year high at 5.2 per cent, Prime Minister Ismail Sabri Yaakob said on Sunday (July 3) that the government is taking steps to address the rising cost of living.

The government will spend RM70 billion (S$22 billion) on subsidies this year - the country's highest support package in history - to temper the spike in petrol, diesel, liquefied petroleum gas, cooking oil, flour and electricity costs.

Over RM700 million has been allocated to maintain the RM9.40 per kg price cap on chicken, while the cooking oil subsidy of RM4 billion is nearly double last year's RM2.2 billion.

Following two cash handouts to low-income households, PM Ismail on Sunday indicated there might be a third.

Bangladesh

In Bangladesh, the price of fine rice rose by 9 per cent last month as flood and unfavourable weather in parts of the country affected harvest yields.

The government has granted 95 food companies permission to import 409,000 tonnes of rice by mid-August to bring prices down.

Import duties on rice between June 22 and Oct 31 will be cut from 62.5 per cent to 25.75 per cent.

South Korea

In South Korea, the government lifted the 22.5 per cent to 25 per cent tariff on 50,000 tonnes of imported pork from last Thursday.

The move is set to lower the production cost of pork by as much as 20 per cent.

The average price of pork rose almost 15 per cent last month to 2,911 won (S$3.10) per 100g, according to data from the Korea Institute for Animal Products Quality Evaluation.

Industry watchers say the surge in pork prices was spurred by Russia's invasion of Ukraine, as well as inflation.

"Corn takes up half of the feed used for swine. But the war between the two countries, two of the biggest suppliers of wheat and corn, has led to a shortage of grains, resulting in higher prices of forage crops," said an official from The Korea Pork Association.

Tariffs were also lifted on six other commodities, including sunflower oil and wheat, until the end of the year, and a list of simple processed foods like kimchi is exempted from value-added tax.

South Korea's central bank raised its policy rate to 1.75 per cent in May to ease inflation from its 14-year high.

Consumer inflation in May rose to 5.4 per cent, with last month's rate expected to surpass 6 per cent.

Japan

In Japan, core consumer prices leaped 2.1 per cent year on year in May, after showing the same gain the month before. The spikes are the highest in seven years.

Prime Minister Fumio Kishida said the government plans to ease the impact of rising electricity prices by awarding power-saving households points that can help to lower utility bills.

A government task force met for the first time last month to tackle inflation.

Emergency measures worth 13 trillion yen (S$134.2 billion), part of which are funded by the private sector, will be implemented to deal with the rising prices of wheat, fertilizer, livestock feed, and energy.

With a recent opinion poll indicating the majority of the public is unhappy with the government's response to rising prices, controlling the cost of living is expected to become a major issue in the Upper House elections on July 10.

Mr Kishida said the government also aims to raise the average minimum wage to at least 1,000 yen per hour during the current fiscal year until March.

Pakistan

In Pakistan, inflation as measured by the consumer price index rose to 21.3 per cent last month, the highest in over 13 years.

Motor fuel, liquefied hydrocarbons and electricity charges saw huge increases year on year, with motor fuel prices rising by at least 95 per cent.

Prices of fuel rose further last Thursday, with the government imposing a petroleum levy to reduce its fiscal deficit.

A policy rate hike by the central bank is also expected when it meets this week, Reuters reported, citing a research report by Pakistan brokerage house Topline Securities.

The State Bank of Pakistan has already raised the policy rates by 400 basis points this year.

The Straits Times

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Asian countries take steps to fight soaring inflation

Published : July 04, 2022

By : The Straits Times