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Long-dormant inflation rises across Southeast Asia

Smaller pandemic aid packages and more-moderate central-bank quantitative easing programs have largely spared Southeast Asian economies from the inflation plaguing the Americas and Europe. However, that is changing as the conflict in Ukraine and global prices rises in food and fuel are putting increasing pressure on the region, consultancy FrontierView reports.

Even without Russia’s invasion of Ukraine unsettling global commodity markets, Southeast Asia was feeling pressure from costlier meat, fish and other foods. Indonesia’s inflation hit a 20-month high in January, while Thailand’s CPI rose 5.28% on the year in February—the highest inflation in 13 years.

In response, governments have begun introducing measures such as subsidies and tax cuts to blunt the impact of inflation on restive populations. The Philippines has allocated $60 million for fuel subsidies, while Vietnam is planning to cut its environmental tax on fuel.

Thailand went even further in the wake of cost-of-living protests, approving a wide range of measures including fuel subsidies, direct payments, price controls, lowering social security contributions, and suspending debt payments, Reuters reported last week.

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