WASHINGTON (AFP) ― A top International Monetary Fund official expressed concern Wednesday about overall inflation in emerging countries beyond the current spike in food and commodity prices.
Naoyuki Shinohara, IMF deputy managing director, highlighted signs of a broadening upward pressure on prices in a speech to Asian central bankers in Colombo, Sri Lanka.
Vendors sell vegetables at a produce market in Beijing. (Bloomberg)
“Prices for both oil and non-oil commodities rose considerably in 2010, partly in response to strong global demand, but also because of supply shocks for selected commodities, such as weather-related crop damage,” he said, according to the prepared text on the IMF website.
“Upward pressure on prices is expected to persist in 2011,” he warned.
Shinohara noted that the uptick in consumer price inflation in emerging economies in 2010 was due partly to rising food prices, but the recent bout of high food price inflation “has been quite persistent and is beginning to feed into overall price inflation in a number of emerging economies.”
In Asia, “core inflation has also begun to rise ― although the degree of acceleration has varied quite a bit across the region ― suggesting that price pressures are broadening,” he said.
The region’s economic conditions are ripe for rising prices, he explained.
On one hand, “real wage growth has also picked up in a number of Asian economies on the back of relatively low and falling unemployment and anecdotal evidence of skill shortages,” he said. However, credit growth, which slowed significantly during the global financial crisis, he said, “has turned the corner and is running at robust rates across emerging Asia.”
The IMF projects that in 2011 Asia will remain the fastest-growing region in the world, with output rising 8.5 percent in the developing countries.