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Asia’s red-hot food prices will likely heat up further in the coming months, with Singapore, South Korea and the Philippines set to see the sharpest price increases, according to Nomura Holdings Inc.

Food prices in Asia ex-Japan rose 5.9% annually in May, from 2.7% in December, Nomura said in a report Monday. That rate should accelerate in the second half of the year given the roughly six-month lag between the movement of global food costs and their impacts in Asia. Issues like China’s pandemic lockdowns, Thailand’s swine fever outbreak and India’s heat wave add to woes.

“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.

While Asia’s central banks initially pledged to look through supply-side shocks, Nomura said looming second-round effects will trigger faster monetary policy normalization.

This story has been published from a wire agency feed without modifications to the text.

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