Just as countries around the world have begun shifting their focus from Covid-19 to post-pandemic recovery, global inflation accelerated by Russia’s invasion of Ukraine and supply chain disruptions have placed economic growth plans in jeopardy.
Thailand’s inflation rate of 7.1 percent is the highest in 14 years and Prime Minister Prayuth Chan-ocha plans to collect $722 million from a profit-sharing system with oil refiners to continue to fund a fuel subsidy program in the upcoming months.
Soaring energy bills and higher prices of raw materials are making it hard for manufacturers and retailers to keep up with surging operational costs without adjusting their prices.
The price of a 15kg cylinder of liquified propane gas (LPG), for instance, has increased from 318 baht in April to 363 baht in June as reported by ThaiPBS.
According to the Trade Policy and Strategy Office inflation rose 7.1% in May year-on-year, taking it to a 14-year high. The rate accelerated from 4.7% in April.
Inflation may accelerate in June as continued increase in fuel prices have raised the costs of transportation and logistics, and a weak baht has driven up the price of imported raw materials and products, Trade Policy and Strategy Office Director-General Ronnarong Phoolpipat said to Bloomberg.
Inflation has impacted every country in Southeast Asia, even as overall post-pandemic economic growth rates remain high.
The Philippines’ inflation rate, 5.4 percent, is the highest in over three years and has already breached the 2 to 4 percent inflation target set by the country’s central bank.
Given its reliance on imported goods, Singapore is reeling from the impacts of increased food and fuel costs. Food prices have increased by 4 percent from June 2021 and that rate could double to 8 percent by the end of this year. Its current rate stands at 5.4 percent, 3 percent higher than last year.
Global developments, including the U.S. Federal Reserve’s decision to raise U.S. interest rates to combat inflation, will complicate the region’s recovery in uncertain ways. But it is clear that Southeast Asia, like the rest of the globe, will be grappling with rising inflation for some time to come.