Singapore's inflation hit a 26-year high in April while Indian wholesale prices are surging, underlining a shift in priorities across Asia as policy makers focus on grappling with growing price pressures. Policy steps and statements by officials across the region show how skyrocketing global prices for everything from oil to rice have become a primary preoccupation among governments, in some cases trumping concerns over growth. Faced with the worst inflation since the 1970s, Pakistan's central bank raised interest rates late on Thursday, sending its main share index down nearly 5 percent on Friday and prompting the rupee to firm 1.2 percent against the dollar. India is struggling with whether to raise fuel prices to cut its swelling subsidies bill in the face of record oil prices, while Indonesia said on Thursday it planned such a move. Singapore's inflation jumped to 7.5 percent in April on higher housing, food and oil prices, prompting the government to raise its full-year inflation forecast to 5-6 percent from 4.5-5.5 percent. “The balance of risk has shifted towards inflation,” said Ravi Menon, a permanent secretary at the Ministry for Trade and Industry. “We expect food and oil prices to remain elevated in the near term and feed through into domestic prices.” At the same time, the government said that it still expected economic growth to slow to between 4-6 percent this year, well below an average growth rate of 8.1 percent in the last four years, even though growth in the first quarter was its quickest since 2005. Menon's comments echoed ones made earlier this week by officials in the Philippines and China, contributing to a growing body of evidence showing the pressure that price rises are exerting on Asian economies and policy makers. “(The) need to control inflation weighs more,” Philippine central bank governor Amando Tetangco said on Thursday, when asked whether supporting growth or controlling inflation was more important in setting monetary policy. Chinese Premier Wen Jiabao told a meeting of his cabinet on Wednesday that, even in the face of economic uncertainties brought about by the devastating earthquake that hit the country's southwest last week, inflation remains Beijing's most pressing economic problem. Annual inflation in the Philippines jumped to 8.3 percent in April, it's highest in nearly three years; that in China hit 8.5 percent, close to a 12-year high. In Manila, soaring commodity prices have likely slowed the Philippine economy in the first quarter and may prompt the government to cut its full-year growth forecast, the economic chief said Friday. Economic Planning Secretary Augusto Santos said he expects first-quarter gross domestic product to have risen between 5.2 percent and 6.2 percent compared with a year ago, slowing from a 7.4 percent expansion in the fourth quarter of last year. As a result, he said the government “may have to cut” its 2008 growth target of 6.3 percent to 7 percent. “Economic growth was likely hurt by high oil and food prices. However, good agriculture numbers may have provided the economy support,” Santos said. The first-quarter economic data will be released May 29. Higher food prices drove April inflation to its highest level in three years. The consumer price index rose 8.3 percent from the same month last year. Even where policy makers have not explicitly stated that inflation is their main concern, their actions show the difficulty high prices are causing them. Pinched by the soaring price of crude, which was trading around $132 per barrel on Friday after hitting a record above $135 on Thursday, Indonesia plans to raise domestically controlled prices of gasoline and diesel in order to reduce its hefty oil subsidies bill. That could push the country's annual inflation rate above 12 percent by December, forcing interest rates up, Hartadi Sarwono, deputy governor of the central bank, said on Thursday. India is also expected to raise petrol and diesel prices soon to save state energy firms from mounting losses, even though it too is grappling to control inflation, an especially poignant issue during an election year. India's wholesale price index rose 7.82 percent in the year to May 10, but a revision took the figure above 8 percent in March for the first time in 3 years. Analysts said the inflation figures, coupled with the looming rise in fuel prices, would thrust the growth-versus-inflation dilemma firmly to the top of the central bank's list of concerns. “Do we live with a high inflation or see growth prospects jeopardized in the short and medium term?” said Shubhada Rao, chief economist at Yes Bank in Mumbai. Concerns over inflation and the prospect of slower economic growth weighed on most Asian currencies on Friday, with the Thai baht falling as low as 32.14 per dollar, down three-quarters of a percent from late Asian trade on Thursday. “There are a couple of important themes: rising inflation and and central banks being behind the curve, still high oil prices, and some expectations of growth slowdown in Asia,” said Thomas Harr, a strategist with Standard Chartered Bank in Singapore. Asia is not alone in facing an inflation threat. It is a concern globally, underlined by a Reuters poll showing inflation forecasts for rich nations rising across the board. Asian countries facing worsening current account balances and weakening currencies - such as Indonesia, India and the Philippines - will probably have to rely on interest rate rises. Others, including Singapore, could be prompted to guide their currencies upwards to offset rising import prices, analysts said. “The pressure will be on to keep the currency strong,” Robert Prior-Wandesforde, an economist at HSBC, said of the Singapore dollar.
