Look: From fuel prices cuts to rent caps, what world governments are doing to ease inflation pain

The Covid-19 pandemic, as well as the Russia-Ukraine conflict, are the major reasons for skyrocketing prices worldwide



By Reuters

Published: Thu 1 Sep 2022, 1:07 PM

Pandemic-related disruptions of global supply chains, as well as the knock-on effects of Russia's war with Ukraine have combined to drive up prices of energy, commodities and basic necessities.

The following is a list of some of the actions taken by governments, aimed at offering relief to hard-hit consumers and companies:

Americas

The United States will help millions of indebted former students by cancelling $10,000 of their outstanding student loans. The move follows the $430 billion Inflation Reduction Act unveiled earlier this month, which includes cuts to prescription drug prices and tax credits, in order to encourage energy efficiency.

Brazil's oil giant Petrobras in mid-August announced a nearly 5 per cent cut on gasoline prices: its third cut in less than a month. In July, the government cut fuel taxes and raised social welfare payments.

Chile had, in July, announced a $1.2 billion aid plan, which included labour subsidies and one-time payments of $120, for 7.5 million of its 19 million residents.

Chile's President Gabriel Boric
Chile's President Gabriel Boric

Europe

In late August, Denmark capped annual rent increases at 4 per cent for the next two years. The move follows earlier relief measures, including a 3.1 billion Danish crown ($418.34 million) package announced in June.

Germany will introduce a gas price levy on consumers from October 1. In July, Berlin agreed to a €15 billion ($15.05 billion) state bailout of Uniper, the country's largest importer of Russian gas. It had also cut fuel taxes and slashed public transport costs, but these measures are set to expire from September.

On August 3, France's parliament adopted a €20 billion relief bill — lifting pensions and some welfare payments — while also allowing companies to pay higher bonuses tax free. In late August, the government said it did not rule out a windfall tax on companies.

A shopper pays with a ten Euro bank note at a local market in Nice, France
A shopper pays with a ten Euro bank note at a local market in Nice, France

Italy approved about €17 billion in aid, on August 4. The legislation aims to cut electricity and gas bills, and adds to about €35 billion — budgeted since January to soften the impact of soaring energy costs.

Power lines connecting pylons of high-tension electricity are seen in Montalto Di Castro, Italy
Power lines connecting pylons of high-tension electricity are seen in Montalto Di Castro, Italy

Poland approved a new package, which includes subsidies for heating plants, whose price increases will not exceed 40 per cent, and a 13.7 billion zloty ($2.91 billion) cash transfer for municipalities to help residents with soaring energy bills. In July, the country had also introduced a relief scheme for holders of local currency mortgages.

Smoke and steam billow from Poland's Belchatow Power Station, Europe's largest coal-fired power plant
Smoke and steam billow from Poland's Belchatow Power Station, Europe's largest coal-fired power plant

Asia

Japan's average minimum wage is set for a record 3.3 per cent increase for the year ending March 2023. The government is also due to refrain from raising the price of the imported wheat it sells to retailers, as a part of a planned broader relief package. The steps follow a $103 billion bill passed in April.

Indonesia will reallocate 24.17 trillion rupiah ($1.63 billion) of its fuel subsidy budget towards welfare spending — including cash handouts to 20.65 million households. The government will also instruct regional administrations to subsidise transport fares.

In May, India imposed restrictions on the exports of food items like wheat and sugar — which account for nearly 40 per cent of the consumer price index — and cut taxes on imports of edible oil.

Africa and the Middle East

In late July, South Africa announced a cut in the pump prices of fuels.

In early July, Saudi Arabia and the United Arab Emirates raised their social welfare spending. The UAE doubled financial support to low-income Emirati families, while Saudi Arabia's King Salman ordered the allocation of 20 billion riyals ($5.33 billion) towards similar causes.

Turkey increased its minimum wage by about 30 per cent in early July, adding to the 50 per cent rise seen at the end of last year.

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