Tags: Inflation | Asia | Worse | Here | Stay | economy | prices

Inflation in Asia is Worse than Thought and Here to Stay

Friday, 11 Mar 2011 08:59 AM

Inflation in many Asian economies is stronger than once thought, extending beyond food and energy, and is likely here to stay, analysts say.

Across the continent, core inflation rates, which exclude volatile energy and food items, are on the rise not just because of issues like weather and oil prices but due to overall demand as well.

"There's not much slack left" in Asia, says Robert Subbaraman, an economist at Nomura in Hong Kong, according to The Wall Street Journal, adding inflation "is going to be long-lasting in Asia."

On top of robust economic growth, demand for labor is so strong in Asia that workers have enough leverage to demand higher salaries and wages.

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Pedestrians pass before a share prices board in Tokyo
With more money in their pockets, workers will pay more for consumer goods.

"It's a job-seeker's market," says Chris Lee, a manager at SG Recruiters Group, a recruiting firm in Singapore.

"The job market will definitely be getting tighter over time and there will be shortages of workers in most industries in the years ahead."

While the U.S. says it's comfortable with inflation rates and will keep monetary policy loose for now, European officials say they're ready to raise interest rates to check rising consumer prices.

"The economic analysis indicates that risks to the outlook for price developments are on the upside," the European Central Bank says in its monthly bulletin for March, according to Reuters.

"Strong vigilance is warranted with a view to containing upside risks to price stability. Overall, the Governing Council remains prepared to act in a firm and timely manner to ensure that upside risks to price stability over the medium term do not materialize."

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Inflation in many Asian economies is stronger than once thought, extending beyond food and energy, and is likely here to stay, analysts say. Across the continent, core inflation rates, which exclude volatile energy and food items, are on the rise not just because of issues...
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2011-59-11
Friday, 11 Mar 2011 08:59 AM
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