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Factbox-Government measures to ease inflation pain

by jcp gbaf

(Reuters) – Pandemic-related disruption to global supply chains and the knock-on effects of Russia’s war in Ukraine have combined to drive up prices of energy, commodities and basic necessities.

Below is a list of some of the actions taken by governments aimed at offering relief to hard-hit consumers and companies:

AMERICAS:

* The United States will help millions of indebted former students by cancelling $10,000 of their outstanding student loans. The move follows the $430 billion “Inflation Reduction Act” unveiled last month, which includes cuts to prescription drug prices and tax credits to encourage energy efficiency.

* Brazil’s oil giant Petrobras on Sept. 1 announced a 7% cut in refinery gate gasoline prices, its fourth cut since mid-July. The government in July cut fuel taxes and raised social welfare payments.

* Mexico’s government will convene to strengthen its anti-inflation plan, its president said earlier this month. In August officials estimated that inflation-combatting subsidies have already cost some 575 billion pesos ($29.04 billion) this year.

* Chile in July announced a $1.2 billion aid plan including labour subsidies and one-time payments for those most affected.

EUROPE:

* The European Union is set to unveil new emergency measures including a windfall profit levy on energy firms and mandatory targets for member states to cut electricity consumption this winter.

* The Czech Republic will cap electricity and gas prices next year.

* Britain will cap consumer energy bills for two years and funnel billions to prop up power companies. The package, announced on Sept. 8 is likely to cost over 100 billion pounds ($117.27 billion).

* Portugal adopted a 2.4 billion euro aid plan, which cuts VAT on electricity and provides one-off payments for workers, families and pensioners.

* Croatia will cap electricity prices from Oct. 1 until March.

* Germany will spend at least 65 billion euros ($66.14 billion) on a new package, which includes a windfall tax, benefit hikes and extending public transport subsidies. Berlin had already announced a gas price levy on consumers from Oct. 1, while in July, it agreed a 15-billion euro state bailout of Uniper, the country’s largest importer of Russian gas.

* Spain will slash value-added tax (VAT) on gas to 5% from 21% from October and has already reduced VAT on electricity twice over the past year to 5%.

* Finland and Sweden will offer billions of dollars in liquidity guarantees to power companies in their respective countries. Sweden in August said it would make 90 billion Swedish crowns ($8.56 billion) available to help consumers with record electricity prices.

* Italy plans to spend at least an additional 6.2 billion euros ($6.2 billion) to help households and firms, following around 52 billion euros, which Rome has already budgeted this year.

* Denmark in August capped annual rent increases at 4% for the next two years in addition to earlier relief measures, including a 3.1 billion Danish crown ($424.29 million) package announced in June.

* France’s parliament on Aug. 3 adopted a 20 billion euro relief bill, lifting pensions and some welfare payments, while also allowing companies to pay higher bonuses tax free. In August, the government said it did not rule out a windfall tax on companies.

* Poland in August approved a new package including subsidies for heating plants, and a 13.7 billion zloty ($2.96 billion) cash transfer for municipalities to help residents with soaring energy bills. The country had also in July introduced a relief scheme for holders of local currency mortgages.

ASIA:

* Japan will present another economic package in October, adding to previous measures including a record minimum wage hike. A $103 billion relief bill was also passed in April.

* Indonesia’s President Joko Widodo ordered provincial governments to cut transport costs and offset the inflationary impact of a fuel price hike announced earlier this month, which sparked nationwide protests. Last month, the government announced it will reallocate 24.17 trillion rupiah ($1.63 billion) from fuel subsidies to welfare spending.

* India has set up a panel to review the pricing formula of locally produced gas, aiming to ensure “fair price to the end consumer” and lower inflation. In May it imposed restrictions on exports of food items including wheat and sugar, and cut taxes on imports of edible oil.

* Malaysia is expected to spend a record 77.3 billion ringgit ($17.15 billion) in subsidies and cash aid this year.

AFRICA AND MIDDLE EAST:

* South Africa in late July announced a cut in the pump prices of fuels.

* Saudi Arabia and the United Arab Emirates in early July raised their social welfare spending. The UAE doubled financial support to low-income Emirati families, while Saudi Arabia’s King Salman ordered the allocation of 20 billion riyals ($5.32 billion).

* Turkey in early July increased its minimum wage by about 30%, adding to the 50% rise seen at the end of last year.

($1 = 19.8034 Mexican pesos)

($1 = 0.8526 pounds)

($1 = 0.9828 euros)

($1 = 7.3063 Danish crowns)

($1 = 4.6248 zlotys)

($1 = 14,850.0000 rupiah)

($1 = 4.5060 ringgit)

($1 = 3.7580 riyals)

($1 = 0.8527 pounds)

($1 = 10.5200 Swedish crowns)

 

(Compiled by Olivier Sorgho, Leika Kihara, Manoj Kumar, Ina Kreutz and Agnieszka Gosciak; Editing by Alison Williams, Hugh Lawson and Tomasz Janowski)

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