Surging gasoline unsettles Asia as inflation poses big challenge

Surging gasoline unsettles Asia as inflation poses big challenge

Bloomberg / New Delhi/Tokyo

Surging gasoline prices are posing a tricky new problem for governments as they seek to nurse virus-hit economies back to health.

In Asia, South Korea has taken steps to ensure a steady supply of the key fuel while tracking prices, and Japan may soon hand aid to local refiners. India, the region’s second-biggest oil consumer, has had an unofficial freeze on prices for almost two months ahead of elections in several key provinces.

“Higher gasoline prices are the most straightforward way for the average guy on the street to feel the effects of inflation,” said Howie Lee, an economist at Oversea-Chinese Banking Corp in Singapore. “It is also the fastest way to create a spiral of rising inflation pressures. That is why politicians tend to sit up and take notice when gasoline prices rise too aggressively.”

Gasoline prices are strong from the US to Asia as increased mobility lifts consumption, with crude oil rallying to the highest level since 2014 this month. That’s adding to inflationary pressures just as other raw materials including foodstuffs also surge, squeezing the wallets of pandemic-weary consumers. In Asia, reduced fuel exports from powerhouse China have tightened supplies.

Retail inflation in India rose