Asia-Pacific inflation surges as Iran war disrupts energy supplies

Taiwan’s annual inflation jumped to 2.2% in May, breaching the 2% threshold for the first time in over a year as transport and energy costs surged, according to official data.tradingeconomics
Philippine inflation eased to 6.8% in May from 7.2% in April but remains more than double the central bank’s 3% target, with gasoline prices up over 51% year-on-year, per Reuters.reuters
Around 80% of Asia’s oil imports pass through the Strait of Hormuz, which Iran has effectively blocked since late February, forcing governments to tap reserves and cap fuel prices.time

Iran War Drives Inflation Surge Across Asia-Pacific

Inflation is climbing across the Asia-Pacific region as the ongoing war in Iran and the closure of the Strait of Hormuz continue to disrupt global energy supplies, squeezing economies that depend heavily on Middle Eastern oil.

Taiwan’s consumer price index rose 2.2% year-on-year in May, jumping from 1.74% in April and breaching the central bank’s 2% alert level for the first time in over a year, according to data released by the Directorate-General of Budget, Accounting and Statistics on Thursday. The increase was driven by transport and communication costs, which surged 4% compared to 2.66% the prior month, as elevated freight and energy costs from the Middle East conflict intensified price pressures in the energy-dependent economy.tradingeconomics

Philippines Eases but Remains Elevated

In the Philippines, annual inflation eased to 6.8% in May from 7.2% in April, the Philippine Statistics Authority reported on Friday. While the decline was attributed to slower increases in transport and food costs, inflation remains more than double the central bank’s 3% target. Gasoline prices showed a year-on-year inflation rate exceeding 51%, while LPG costs rose 41%. The Bangko Sentral ng Pilipinas is expected to raise interest rates for a second consecutive time at its June 18 meeting.reuters

Broader Regional Pressure

Thailand’s headline inflation stood at 2.79% in May, near a 38-month high, with officials pointing to higher fuel costs linked to the Strait of Hormuz disruption as the primary driver. In Japan, wholesale inflation hit a three-year peak of 4.9% in April as petroleum and chemical costs surged, strengthening expectations that the Bank of Japan will raise interest rates as early as June.tradingeconomics

The Organization for Economic Cooperation and Development warned this week that the conflict would suppress global growth to 2.8% this year while keeping inflation elevated into 2027. Around 80% of Asia’s oil imports transit through the Strait of Hormuz, which Iran has effectively blocked since late February in retaliation for U.S. and Israeli military strikes. The disruption has forced governments across the region to release strategic reserves, impose fuel price caps, and increase subsidies to shield consumers from the energy shock.time