Neumann still expects inflation in the region, including China and Japan, to head lower this year to 2.5 percent, compared to 2.7 percent in 2011.
Arjuna Mahendran, Head of Investment Strategy at HSBC Private Bank, agrees that as long as prices of energy , “a key commodity component”, are kept in check, inflation should be under control.
“Energy demand in general seems much more subdued because India's only growing 5.5 percent and China's only growing 7-8 percent, a lot less than they were growing even last year,” he said on CNBC Asia’s “Squawk Box". “And that I think means that energy prices should remain subdued and that could be the factor that keeps a lid on inflation taking off on a generalized basis.”
Asia was hit hard in 2007 and 2008 when shortages of foodstuffs, especially rice, led to hoarding and riots. Food inflation hits Asia harder than other regions food make up a greater portion of consumer spending than in other parts of the world. In developing Asia, for example, it makes up 35 percent of consumer prices, compared with about 20 percent in the U.S. and Europe, according to the International Monetary Fund .Page 2 of 3 | Prev Page | Next Page