Governments are hoping that expectations of rising prices do not become entrenched
Save time by listening to our audio articles as you multitaskIn fact, inflation in South-East Asia is relatively mild compared with many parts of the world. This month, an economic think-tank affiliated with the Association of South-East Asian Nations , a regional club, forecast average inflation of 5.2% for its ten members this year. That is more than double last year’s rate, but half the level of Brazil and well below India or South Africa.
The effects of these rising prices are felt acutely in regions such as South-East Asia, where food gobbles up a big share of spending. In 2020 food consumed at home accounted for between two-fifths and half of the expenditure of Burmese, Cambodians, Filipinos and Laotians, compared to about a tenth in rich countries, according to the Economic Research Service, an American government agency. Its ranking of such spending in more than 100 countries put that quartet among the top 15.
Last year, even before prices started rising in the region, one in five South-East Asians—or 139m people—either lacked consistent access to food or had run out of food and gone without eating long enough to put their health at risk. That is about three times the proportion in East Asia, according to the. That number will inevitably increase this year.
Such measures have thus far been effective at controlling inflation in Indonesia and Malaysia. As net exporters, including of coal and natural gas, both countries have profited from the commodities boom. Flush with export earnings, these governments can better afford to subsidise imports than other countries in the region, notes Mr Mattoo.on subsidies this year, the most ever.
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