Vietnam and Malaysia will experience less severe pressure on prices compared to other ASEAN countries

Elevated global food and fuel prices will lead to higher inflation in ASEAN in 2023

ASEAN’s position as a net importer of fuel and food commodities that are experiencing supply-side challenges will cause prices in the region to remain elevated in 2023. In more vulnerable markets with larger low- and middle-income populations, such as the Philippines, firms should prepare for heightened price sensitivity and offer promotions and discounts where possible. At the same time, firms should expect price pressures on customers to be much less severe in Vietnam and Malaysia, prompting a faster recovery in consumption and investment.


2022 was a year of high inflation in ASEAN due to the supply shortages stemming from the Russia-Ukraine war. Regional inflation averaged 4.8% YOY in 2022, with Thailand, Singapore, and the Philippines seeing the highest inflation levels. Global food shortages due to the war, natural disasters in Thailand and the Philippines, and protectionist measures by key exporters led to high food inflation in ASEAN. Moreover, fuel prices rose sharply across all ASEAN markets due to reduced oil and natural gas exports from Russia. 

Our View

Price pressures, especially in Singapore and the Philippines, will remain acute in 2023. While global commodity prices have eased compared to the highs seen in mid-2022, supply and pricing pressures remain high compared to pre-war levels. Firms should note that inflation levels will vary significantly across individual ASEAN markets: 

  • Singapore: Prices will remain elevated in Singapore (particularly in H1 2023) due to the country’s high import dependence on fuel and food commodities. Singapore imports 90% of all food supplies; hence, prices of key food commodities, such as milk and poultry, will remain high in 2023. 
  • Vietnam: Fuel tax cuts by the government, which are expected to remain in place through 2023 before being removed in 2024, will help keep a lid on inflation this year.
  • Indonesia: Government efforts to redirect palm oil supply toward biodiesel will put upward pressure on domestic cooking oil prices. Moreover, reduced government subsidy support compared to 2022 will weigh on low- and middle-income consumers, keeping prices elevated in 2023.
  • Philippines: Inflationary pressures in the Philippines will be the highest among ASEAN peers. Food prices in particular will be high due to recent typhoons that have exacerbated a domestic supply shortage of key agricultural commodities.  
  • Thailand: Thailand imports 30% of its total domestic fuel needs, among the highest in ASEAN. With oil prices expected to fall this year compared to 2022, inflation levels in Thailand will also fall in tandem. We forecast inflation levels in Thailand to be 4.4% YOY in 2023 compared to 6.1% YOY in 2022.
  • Malaysia: Prices for all key commodities, except food, will rise at a slower pace in 2023 compared to 2022. The newly appointed government will likely provide additional subsidies in the revised 2023 budget, which will keep prices in check.

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