Governments continue to take new measures to mitigate the effects of high inflation

In the face of high inflation, which continues to be the “headache” of the global economy, governments continue to take new measures to help citizens cope with rising food and energy prices and cover other costs.

The prices of energy, commodities and basic necessities remain high in many countries due to the supply problems caused by the Kovid-19 outbreak and the Russia-Ukraine war.

Global uncertainty triggered by the Russia-Ukraine war; High prices in the energy sector continue to trigger prices for other goods, while continuing to have a multidimensional impact, including on the global economy and finance.

While the world economy’s struggle with inflation continues, high inflation increases the cost of living of people in developed economies as well as developing countries day by day. While double-digit inflation continues to be seen in many countries around the world, the struggle of countries against high inflation brings along recession concerns along with tightening monetary policies.

Although inflation in some economies has started to decline slightly from historical levels reached in the middle of this year, governments are trying to mitigate the impact of inflation on citizens with new measures.

American continent

In the USA, the world’s largest economy, inflation has slowed down in recent months, after peaking in 41 years, especially due to the rise in energy and food prices. The Consumer Price Index (CPI) in the country increased by 7.1 percent year-on-year in November, less than expected.

The US administration, especially arguing that the increase in gasoline prices constitutes a significant part of the inflation, has struggled with inflation by taking measures to reduce gasoline prices.

In March, the US President Joe Biden administration allowed the launch of more than 180 million barrels of oil from the strategic oil reserve, as well as the $433 billion “Inflation Reduction Act”, which includes comprehensive health, climate and tax regulations to reduce inflation in August.

Most recently, the Biden administration announced last month that it will provide $13.5 billion in funding to help low-income households reduce heating costs in the United States.

In Canada, the other major economy of the Americas, support for low-income individuals and debt relief for students were also provided.

Canada announced a package of measures worth 4.5 billion Canadian dollars (3.4 billion dollars) in September to support low-income families in the face of high inflation. The package in question included tax relief and one-time rental support for low-income families.

The Mexican government also announced in August that it will raise the minimum wage by 20 percent next year, after allocating about 575 billion pesos ($28.7 billion) to fight inflation.

While the Colombian government announced that it will increase the minimum wage by 16 percent next year, the Ecuadorian government has determined the rate of increase in the minimum wage for next year as 6 percent.

The Brazilian Senate approved the constitutional amendment to increase the government’s spending ceiling by 145 billion Brazilian reals ($27.8 billion), while allowing financing for the next term extension of social assistance payments to poor families. Brazil’s oil company Petrobras has also cut its gasoline prices several times this year.

Argentina also announced that it will raise the income tax base next year. The government has reached an agreement with the major oil companies operating in the country to set a cap on increases in gasoline prices. In addition, the Argentine government has made deals with grocery stores and consumer goods suppliers to fix or strictly regulate the price of around 1,500 products to contain inflation, which is expected to reach 100 percent this year in the country.

Europe

Annual inflation in the Eurozone, which reached a record high of 10.6 percent in October, fell to 10.1 percent in November.

While the European Union (EU) member states continue to take special measures against energy prices, which suppress inflation upwards, the EU member states have finally agreed to apply a ceiling price of 180 euros per megawatt hour to natural gas.

Countries within the EU continue to take various importance, especially in the field of energy. As of January, the German government passed a 100 billion-euro law to set upper limits on electricity and gas bills for residential and industrial estates. In addition, the nationalization of the German energy firms Uniper and Sefe was also accepted.

France has also taken steps to nationalize energy group EDF, while the government has announced that it will limit energy price increases for households to 15 percent next year.

In Czechia, it has been approved to keep electricity and natural gas prices for large companies at the same level as those currently charged to households and small companies.

The Portuguese government has announced that it will limit the increase in the electricity price to 3.3 percent for around 1 million households and small businesses next year.

Slovakia has also announced that it will limit energy prices for households next year, with subsidies and an agreement with the main electricity supplier.

Croatia has decided to limit electricity prices until March.

Poland has announced that it will limit electricity prices for small businesses, hospitals and residences next year. In addition, the government has announced that it will raise the minimum wage twice next year, and more than previously planned.

The Italian government also said it plans to spend around 21 billion euros next year to help families and businesses cope with high energy costs.

The Hungarian government and private sector employers agreed on a 16 percent minimum wage increase in the country for next year, while the Romanian government announced that pensions will be increased by 12.5 percent by the new year.

Belarus, on the other hand, banned any hikes in order to avoid exorbitant prices.

Asia-Pacific

In the face of price increases in Asia, governments continued to take new measures.

In order to mitigate the effects of inflation in Japan, a new $200 billion spending package was announced, which includes subsidies for energy expenditures.

In Thailand, where tax reductions were made in fuel and the minimum wage was increased by 5 to 8 percent in September, the consumption tax reduction for diesel fuel was extended until January 20.

In India, after the local governments announced aid packages of approximately 13 billion dollars, the government implemented new measures for food price increases. In this context, it was reported that 2 to 3 million tons of wheat will be provided to large consumers such as flour mills and biscuit producers. The Indian government also restricted rice exports in September to increase supply.

The Philippine government has decided to extend tariff reductions on imported rice and other foodstuffs until the end of 2023.

The Australian government has also implemented legislation that sets a one-year ceiling price on natural gas and aims to provide A$1.5 billion ($1.01 billion) assistance to households and small businesses.

In the Middle East, as part of the fight against high inflation in Egypt, a committee was established to determine “fair prices” for 10 to 15 strategic and basic commodities.

Social assistance expenditures increased in July in Saudi Arabia and the United Arab Emirates (UAE). The UAE increased the financial support provided to low-income families to 28 billion dirhams ($7.6 billion), while Saudi Arabia allocated 20 billion riyals ($5.33 billion).