Runaway Inflation: A Review of Government Strategies to Control It

First modification: 08/08/2022 – 19:39

The disruption to global supply chains brought about by the coronavirus pandemic, coupled with fallout from Russia’s war in Ukraine, have fueled a growing momentum in global consumer prices.

According to the Food and Agriculture Organization of the United Nations (FAO), the global food price index has been falling from its peak in March, but remains well above the records of a year ago.

Meanwhile, the prices of energy, raw materials and basic goods continue to strain the pockets of citizens around the world, prompting governments to take action.

America: a great economic package in the United States

The United States Senate approved on Sunday, August 7, the “Inflation Reduction Act of 2022”, a 430,000 million dollar plan that, among other things, reduces the cost of medicines for the elderly, increases some corporate taxes and introduces consumer tax credit measures to encourage energy efficiency.

In Brazil, President Jair Bolsonaro and several lawmakers have been pushing state-owned energy giant Petrobras to cut gasoline prices further. In July, the company announced two price reductions for a cumulative 9%, bringing prices to their lowest levels since March.

Europe: new taxes and millionaire relief packages

Germany plans to introduce a tax on gas consumption from October 1, after announcing in July a 15 billion euro bailout of Uniper, the country’s biggest importer of Russian gas. The German government had also introduced a tax cut on gasoline and diesel, while lowering public transport costs.

For its part, the French Parliament adopted on August 3 an inflation relief package of 20,000 million euros, raising pensions and some items of social assistance, in an attempt to increase the purchasing power of households.

Italy approved on August 4 an aid package for some 17,000 million euros aimed specifically at reducing electricity and gas bills, while Poland introduced in July the so-called “temporary payments” relief plan for those with mortgages in local currency. , which allows them to skip payments for eight months over a two-year period.

Checks to families, one of the strategies in Asia and the Middle East

Japan rolled out a $103 billion aid package in April to cushion the economic blow from rising raw material costs. The plan included gasoline subsidies and cash payments to low-income households with children.

India, meanwhile, in May imposed restrictions on food exports, including wheat and sugar, which account for almost 40% of the consumer price index, and reduced taxes on imports of cooking oil.

The United Arab Emirates doubled financial support for low-income Emirati families, while Saudi Arabia’s King Salman ordered some $5.32 billion allocated for similar programs.

Turkey, in early July, increased its minimum wage by 30%, adding to the 50% increase seen at the end of last year. However, its consumer prices are almost 90% higher than a year ago.

with Reuters