FROM PAGE B4

COST-OF-LIVING RELIEF

Some countries have turned to stimulus measures as rising fuel costs bite into household budgets.

The Japanese government ‌said on Tuesday it plans to tap 800 billion yen ($5 billion) in reserve funds to finance subsidies aimed at keeping gasoline prices at about 170 yen per litre on average. The measure would cost as much as 300 billion yen per month.

New Zealand said on Tuesday that it would provide temporary financial support of NZ$50 ($29.30) every week from April for low-income families.

“We know these families will be hit particularly hard by the global fuel-price shock.

We are delivering them timely relief,” New Zealand Finance Minister Nicola Willis said.

In neighbouring Australia hundreds of petrol stations are running dry from panic buying and shortages, which are acutely hitting the remote regional areas ​of the vast continent.

The centre-left government introduced legislation in the parliament to double penalties for fuel price gouging.

Several Asian countries have also released petrol and diesel from domestic reserves and temporarily loosened gasoline and diesel quality standards to increase supply.

POLICY DILEMMA

The glaring contrast with the pandemic, however, is that central banks are not rushing to cut interest ​rates. In fact, they are considering hikes.

During the pandemic, demand collapsed as many economies were essentially shuttered for health reasons, so policymakers responded ​with massive stimulus.

Now, the Reserve Bank of Australia has already hiked rates twice this year. It cited energy risks as a material risk to inflation and a reason for raising rates to a 10-month high last week.

Investors expect Japan, Britain and Europe will all raise rates in coming months, and pressure on Asian economies may be even more acute as their currencies slip against the dollar.

“Central banks face a classic policy dilemma when oil prices surge – inflation ​rises but growth might weaken,” Jennifer McKeown, chief global economist at Capital Economics, said in a note last week.

“The ​right response depends crucially on why oil prices are rising, how persistent the shock is, and whether inflation expectations are at risk,” she added.