The ongoing conflict in Iran has led to significant disruptions in oil supplies, resulting in higher prices for food and fuel across Southeast Asia and a sharp decline in consumer sentiment, according to multiple reports [1][2]. In Singapore, Grab, a leading ride-hailing company, has increased its fuel surcharge, directly impacting transport costs for drivers and consumers [1]. In Vietnam, Habeco, a prominent brewer, has raised the price of its affordable draft beer, illustrating how rising input costs are affecting everyday goods [1]. Motorcycle riders in Bangkok, Thailand, are also facing sharply higher fuel prices, with food prices climbing as increased transportation expenses are passed along supply chains [1]. Some fishing operators in Thailand are reportedly reluctant to sail due to surging fuel costs, and Vietnamese policymakers are concerned that inflation could threaten the country's ambitious 10% economic growth goal [1].
Market analysts warn that these price increases may weaken consumer spending across Southeast Asia, potentially slowing economic growth for the region [1]. Central banks are monitoring inflation closely, with some, such as South Korea, holding rates steady as the Iran war continues to fan inflationary pressures [1]. Asian governments have responded with subsidies and other measures to alleviate energy cost pressures, but many sectors, including transportation and food and beverage, are already feeling the effects [1]. The situation has also prompted discussions about remote work and biodiesel expansion in Indonesia as part of broader efforts to tackle the oil crisis [1].
According to a University of Michigan survey, consumer confidence plunged to a record low in April, with the headline index falling to 47.6, down 10.7% from March and marking its lowest on record [2]. Current conditions and expectations indexes also saw double-digit monthly declines [2]. The drop in sentiment coincided with a sharp spike in inflation expectations, with respondents seeing prices up 4.8% in a year from now, a full percentage point rise from March and the highest since August 2025 [2]. The Bureau of Labor Statistics reported that its all-items consumer price index rose 0.9% in March, pushing the 12-month inflation rate to 3.3%, with most of the increase attributed to surging energy prices [2]. Food inflation remained little changed [2].
Survey comments indicate that many consumers blame the Iran conflict for unfavorable changes to the economy [2]. However, most interviews were completed before the April 7 ceasefire, so the survey primarily reflects conditions from March [2]. The survey director, Joanne Hsu, noted that economic expectations may improve once consumers gain confidence that supply disruptions from the Iran conflict have ended and gas prices have moderated [2]. Five-year inflation expectations also moved higher, to 3.4%, a 0.2 percentage point monthly increase, though a percentage point below the level of a year ago [2].
Analysts point to rising inflation expectations, increased price volatility, and the risk that sovereign ratings could come under pressure if the energy crisis persists [1]. The full impact on regional economies will depend on both the duration of the conflict and the effectiveness of policy responses [1].
CONCLUSION
The Iran conflict has triggered a surge in energy prices and inflation across Southeast Asia, leading to record low consumer sentiment and concerns about economic growth. Governments and central banks are closely monitoring the situation and implementing measures to cushion the impact, but market volatility and inflation expectations remain elevated. The outlook hinges on the resolution of supply disruptions and the effectiveness of policy responses.