“Consumers’ perception of inflation is strongly influenced by the prices of frequently purchased necessities, such as food, and can lead to higher inflation expectations,” it said, adding that Jakarta and Manila have already had to raise minimum wage levels to account for the higher cost of living.
Inflation is already spreading beyond cereals and edible oils to other categories like meat, processed food and even dining out, Nomura said. Rice – so far kept stable by ample stocks – may be next if demand surges as nations seek alternatives to pricey wheat.
That’s flashing warning signs for large food importers like Singapore, which is expected to see food inflation double to 8.2% in the second half from 4.1% now. India will likely see the highest print at 9.1% due to rising feedstock costs, based on Nomura estimates.
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While Asia’s central banks initially pledged to look through supply-side shocks, Nomura said looming second-round effects will trigger faster monetary policy normalisation.
