Food price variations affect Asian macroeconomic outlook: S&P

MUMBAI: Variations in the food prices across Asia have implications on the region's immediate macro- economic outlook, a latest report by Standard and Poor's says.

"Vietnam is by far the most adversely affected, with consumer prices of food rising by year-on-year rates for over 20 per cent every month this year. China and Indonesia have also had persistent double-digit increases in food prices, " Standard and Poor's Asia-Pacific Chief Economist Subir Gokran said.

Besides, other ASEAN (Association of South East Asian Nations) countries have seen relatively modest increases.

In Malaysia, food prices have risen by only five per cent this year.

"In short, while food prices may be a global problem, at least in Asia they are clearly a greater problem for some than for others, Gokarn said.

According to the article, 'Short Production Cycles Key to Asia's Food Supply Safety', price index numbers can distort the realities that consumers face.

Virtually all countries in the region have elaborate control mechanisms covering production and distribution of food, which, among other things, tend to suppress the reporting of inflationary tendencies that consumers actually have to deal with, Gokran added.

S&P further said that there are several macro-economic implications arising from food-price hikes. Central banks are not in a position to ease up on liquidity, while governments' facing food shortages would restrict exports, thus creating price pressures for those countries dependent on imports.