May inflation numbers in much of Asia suggest a pick-up in price pressures is proving to be faster than anticipated, but economists say this is unlikely to trigger a sharp rise in interest rates for now.
South Korea, Taiwan and Thailand all reported higher-than-expected inflation data, while in Indonesia, inflation crept back up after dipping in April.
Persistently high oil prices were again a key driver behind inflation. While most central banks would probably stick to a policy of raising interest rates, they would also be wary about speeding up rate increases amid concerns of a slowdown in economic growth later this year, analysts said.
"There does seem to be a pick-up in inflation as the pass-through from high energy prices - that had until now been relatively contained - makes an impact," said David Cohen, an economist at Action Economics in Singapore.
"But Asian central banks are watching the Fed as much as they are watching inflation and the latest numbers shouldn't trigger sharp rate hikes."
In most cases, central banks were expected to maintain current policies of gradually tightening monetary policy.
Thailand's consumer price index (CPI) in May rose 6.2 percent in May from a year earlier - matching a 7-year high last hit in October - against a 6.0 percent rise in April.
This has reinforced a view that the Bank of Thailand will lift rates by a quarter of a percentage point when it meets on Wednesday.
"In Thailand the news flow shows the government is going to increase the minimum wage and raise energy prices again," said Irene Cheung, an economist at ABN Amro Bank.
"All this points to a further rise in inflation, and we have not seen all the price pressures reflected in the data." Economists in India say a sharp rise in the wholesale price index (WPI), a key measure of inflation, also supports the case for higher rates there. India on Monday raised petrol and diesel prices for the first time in nine months and this is expected to put further upward pressure on inflation.
The WPI rose 4.74 percent in the 12 months to May 20. It was at about 3.6 percent at the end of April. Bank Indonesia, which cut interest rates last month, is tipped to hold off lowering rates again at a meeting on Tuesday because of high inflation and a weakening in the rupiah.
Indonesia's CPI in May rose 15.60 percent from a year earlier, higher than an increase of 15.4 percent in April, partly due to higher prices for food and clothing. Analysts said that although inflation in South Korea and Taiwan is relatively tame, inflationary pressures were increasing as the impact of high oil prices becomes more marked.
South Korea's consumer prices rose a slightly faster-than-expected 2.4 percent in May from a year earlier. The annual rate of core inflation, which strips out energy and food prices, rose to a 10-month high of 2.0 percent. Most analysts expect the Bank of Korea to hold rates steady at a meeting on Thursday amid concerns that higher credit costs could hurt growth.
But some economists were not ruling out a move. "The Korean central bank may want to be pre-emptive, and it is possible that they could hike interest rates this week," said Sebastien Barbe, a senior economist at Calyon in Hong Kong. Data on Monday showed Taiwan's May CPI rose 1.58 percent from a year earlier, the fastest pace since January.
The wholesale price index rose an annual 6.24 percent in May, the fastest pace in about 1-1/2 years, due to higher raw material prices, and suggesting inflationary pressures will build further. In the Philippines, meanwhile, signs of easing inflation meant the central bank there had room to keep rates steady for the time being, analysts said. Consumer prices rose 6.9 percent in May from a year earlier, down from 7.1 percent in April.
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