The Russia-Ukraine war has sent shockwaves throughout world energy markets. Russia is one of the largest producers and exporters of natural gas, crude oil, and coal in the world. As economic sanctions on Russia have escalated due to the war, cutbacks in Russian exports and market expectations of supply shortages have led to soaring prices for fuels across the world. Since the start of the war in February 2022, global prices of crude oil and natural gas have risen to their highest levels in more than a decade and the price of coal is at an all-time high.

Escalating energy prices are putting upward pressure on global inflation. The extent to which global energy prices affect headline inflation depends on factors such as energy import dependence and the weight of energy and energy-intensive goods and services (e.g., transport) in the consumer price basket. This note examines the impact of rising global energy prices on inflation in the ASEAN+3 region.