Asia faces prolonged inflation headwinds through 2027, warns development bank

Escalating geopolitical conflicts are expected to keep inflation elevated across Asia for several years, according to warnings from the Asian Development Bank. The multilateral institution cited the intensification of fighting in Iran and the widening of conflict into Yemen as key factors constraining crude oil and refined petroleum supplies to the region.

Simultaneously, Russia's ongoing military operations in Ukraine have disrupted global grain shipments, creating additional upward pressure on food prices across Asia. These supply-side shocks are compounding existing inflationary pressures that have persisted since the post-pandemic recovery began.

The combination of energy and food price volatility poses particular challenges for developing economies in South and Southeast Asia, where households typically spend a larger proportion of income on these essentials. Central banks across the region face a delicate balancing act between supporting growth and containing price increases.

The ADB's outlook suggests policymakers should prepare for an extended period of price instability rather than a near-term return to pre-pandemic inflation levels. Regional governments are being advised to strengthen supply chains and diversify import sources to mitigate vulnerability to future geopolitical disruptions.