Inflation and Food and Energy Prices
Inflation in developing Asia is on the rise. The average inflation rate in the region increased to 5.3% in July from 3.0% in January. Even so, price pressures in developing Asia remain more moderate than in advanced economies, including the US and the euro area, and most emerging economies. But the continued rise in inflation this year has pushed the regional rate 2.5 percentage points above the 2015–2019 prepandemic average, which suggests an increasing deviation from more normal price dynamics. The regional aggregate masks significant differences across subregions. In July, the Caucasus and Central Asia had the highest inflation rate, at 13.5%, followed by South Asia at 10.0%. Inflation in East Asia was just 3.0%.
Rising global food and energy prices contributed to inflation increasing throughout the region. While global food and energy prices have been decreasing recently, it will take time for these declines to translate into lower domestic prices.