SINGAPORE (Reuters) – Depending on where you look, Asia’s inflation is either benign or stubbornly hot.

China’s March inflation rate stayed below Beijing’s 4 percent target and appeared to be on a softening trajectory, and South Korea’s dropped to a 20-month low. But other figures show price pressures actually picked up last month, and factories paid more for raw materials.

The disconnect stems from the way inflation is measured. The primary indicator in many Asian economies compares prices against a year earlier, not the prior month as is common in the United States and Europe.

That can be misleading.

Asia’s inflation looks tame now largely because prices were high a year ago, when oil spiked because fighting in Libya threatened supplies, and shortages of pork and other food drove up costs. Economists call that the base effect.

Central bankers trying to calibrate interest rates need to know where prices are headed, not where they’ve been. Otherwise, they risk missing the warning signs of a build-up in inflation that will only become harder to contain.

“The month-on-month data gives you a better gauge of the inflation pulse, what’s happening right now,” said Rob Subbaraman, chief Asia economist for Nomura in Hong Kong. “I’m a little bit sceptical of looking too closely into the year-on-year numbers now.”

SINGAPORE (Reuters) – Depending on where you look, Asia’s inflation is either benign or stubbornly hot.

China’s March inflation rate stayed below Beijing’s 4 percent target and appeared to be on a softening trajectory, and South Korea’s dropped to a 20-month low. But other figures show price pressures actually picked up last month, and factories paid more for raw materials.

The disconnect stems from the way inflation is measured. The primary indicator in many Asian economies compares prices against a year earlier, not the prior month as is common in the United States and Europe.

That can be misleading.

Asia’s inflation looks tame now largely because prices were high a year ago, when oil spiked because fighting in Libya threatened supplies, and shortages of pork and other food drove up costs. Economists call that the base effect.

Central bankers trying to calibrate interest rates need to know where prices are headed, not where they’ve been. Otherwise, they risk missing the warning signs of a build-up in inflation that will only become harder to contain.

“The month-on-month data gives you a better gauge of the inflation pulse, what’s happening right now,” said Rob Subbaraman, chief Asia economist for Nomura in Hong Kong. “I’m a little bit skeptical of looking too closely into the year-on-year numbers now.”

SINGAPORE (Reuters) – While many European countries struggle to pay for social safety nets, some in Asia are finding they can no longer afford to do without them.

The shift is as much about politics as economics. Asia’s explosive growth over the past decade has created thousands of new millionaires and widened the income gap. Rising inequality is becoming a bigger issue at the polls.

In Malaysia, where elections are widely expected this year, the cabinet has approved a national minimum wage for the first time, two government sources said. Hong Kong, which will select a new chief executive on March 25, adopted a minimum wage for the first time last year.

Singapore released a budget last month with the slogan, “An inclusive society, a stronger Singapore.” It included tax relief for lower-income families and more spending on medical care for the needy. India’s budget, expected on Friday, will probably contain heavier spending on social programmes as well.

In both countries, the ruling party lost ground in the most recent polls.

Asian nations have traditionally left social protections up to families or perhaps local leaders who offer assistance in exchange for political support, said Frederic Neumann, co-head of Asian economics at HSBC in Hong Kong.

“Modernization has broken this down, leaving the poor arguably less well protected and creating a need for more formal protection,” he said.

SINGAPORE (Reuters) – While many European countries struggle to pay for social safety nets, some in Asia are finding they can no longer afford to do without them.

The shift is as much about politics as economics. Asia’s explosive growth over the past decade has created thousands of new millionaires and widened the income gap. Rising inequality is becoming a bigger issue at the polls.

In Malaysia, where elections are widely expected this year, the cabinet has approved a national minimum wage for the first time, two government sources said. Hong Kong, which will select a new chief executive on March 25, adopted a minimum wage for the first time last year.

Singapore released a budget last month with the slogan, “An inclusive society, a stronger Singapore.” It included tax relief for lower-income families and more spending on medical care for the needy. India’s budget, expected on Friday, will probably contain heavier spending on social programs as well.

In both countries, the ruling party lost ground in the most recent polls.

Asian nations have traditionally left social protections up to families or perhaps local leaders who offer assistance in exchange for political support, said Frederic Neumann, co-head of Asian economics at HSBC in Hong Kong.

“Modernization has broken this down, leaving the poor arguably less well protected and creating a need for more formal protection,” he said.

By Emily Kaiser

(Reuters) – Emerging markets talked up their desire to break Washington’s hold on the top World Bank job on Thursday after Robert Zoellick announced he would step down, yet they showed little inclination to band together to force change.

Much like in 2011, when Dominique Strauss-Kahn resigned as managing director of the International Monetary Fund, officials from countries such as Brazil and the Philippines said it was time to break the decades-old pattern of putting an American in charge of the World Bank and a European atop the IMF.

“It is not so much the identity of Mr. Zoellick’s replacement that concerns us but rather the process in which his successor is selected,” said Philippines Finance Secretary Cesar Purisima.

“We are confident that given the increasing importance of emerging markets in the global economy, outdated practices of the past will be revisited,” he said.

However, there was not much evidence that emerging markets could field a candidate and build a coalition large enough to challenge the United States.

Zoellick will leave his post in June, when his term ends. U.S. Treasury Secretary Timothy Geithner said on Wednesday that Washington would put forward a candidate “in the coming weeks” and called for an open process to fill the job.

SINGAPORE (Reuters) – Asia’s central bankers have yet another reason to hesitate now that the U.S. Federal Reserve looks likely to keep interest rates low for longer.

Indonesia, Thailand, Australia and the Philippines have all cut interest rates at least once in the past three months to try to shore up economic growth, and many economists predict more easing to come this year from India and South Korea.

But as the U.S. central bank extends the horizon for its first rate hike, it changes the Asian equation. Instead of lowering interest rates, which may have unintended consequences when the Fed is on hyper-extended hold, it may make more sense for some economies to tinker with currency exchange rates.

Forecasts released last week from Fed officials show that it will probably be late 2014 before rates rise from the current level near zero — considerably longer than the mid-2013 low-rate pledge the central bank had made back in November.

That could provide a “policy breather” for emerging markets if it helps sustain U.S. growth, which is essential to export-sensitive Asia, Philippines central bank Governor Amando Tetangco said on Thursday.

However, the Fed’s forecasts are conditional. If the U.S. economy strengthens more than expected or inflation threatens to build, the Fed is under no obligation to stick to a late 2014 timetable for tightening.

“There is still much confusion over what the Fed did or didn’t do,” said Thomas Lam, chief economist at OSK-DMG in Singapore. “That’s going to add another layer of complexity for Asian policymakers.”

SINGAPORE (Reuters) – Asia’s central bankers have yet another reason to hesitate now that the U.S. Federal Reserve looks likely to keep interest rates low for longer.

Indonesia, Thailand, Australia and the Philippines have all cut interest rates at least once in the past three months to try to shore up economic growth, and many economists predict more easing to come this year from India and South Korea.

But as the U.S. central bank extends the horizon for its first rate hike, it changes the Asian equation. Instead of lowering interest rates, which may have unintended consequences when the Fed is on hyper-extended hold, it may make more sense for some economies to tinker with currency exchange rates.

Forecasts released last week from Fed officials show that it will probably be late 2014 before rates rise from the current level near zero — considerably longer than the mid-2013 low-rate pledge the central bank had made back in November.

That could provide a “policy breather” for emerging markets if it helps sustain U.S. growth, which is essential to export-sensitive Asia, Philippines central bank Governor Amando Tetangco said on Thursday.

However, the Fed’s forecasts are conditional. If the U.S. economy strengthens more than expected or inflation threatens to build, the Fed is under no obligation to stick to a late 2014 timetable for tightening.

“There is still much confusion over what the Fed did or didn’t do,” said Thomas Lam, chief economist at OSK-DMG in Singapore. “That’s going to add another layer of complexity for Asian policymakers.”

SINGAPORE (Reuters) – Asia’s economic growth may be settling into a middling pace that is too slow to provide significant global support but too fast to warrant aggressive policy easing.

Most of the region’s emerging economies have space to cut interest rates or boost government spending to counter the impact from the global slowdown.

That’s in sharp contrast to the developed world where the United States, Britain, Japan and others have long since pushed benchmark borrowing costs down to near zero, while swollen budgets provide litle scope for stimulus.

But the latest batch of economic data out of Asia showed growth was not slowing quite as precipitously as many economists had feared. This bolsters the wait-and-see case, particularly when the biggest economic threat — Europe’s debt crisis — is so difficult to predict.

“The data still suggests that we’re losing momentum, but we’re not losing momentum in a rapid deterioration that requires immediate action,” said Claudio Piron, emerging Asia rates strategist with Bank of America-Merrill Lynch.

Take China’s fourth-quarter growth figures, for example. Although the year-on-year rise of 8.9 percent was the slowest since mid-2009, it was still a bit stronger than economists polled by Reuters had predicted.

In India, a measure of factory activity picked up far more than expected in December, alleviating fears that the economy was unraveling. Yet gross domestic product growth has slowed dramatically and is likely to worsen in the current quarter.

SINGAPORE (Reuters) – Asia’s economic growth may be settling into a middling pace that is too slow to provide significant global support but too fast to warrant aggressive policy easing.

Most of the region’s emerging economies have space to cut interest rates or boost government spending to counter the impact from the global slowdown.

That’s in sharp contrast to the developed world where the United States, Britain, Japan and others have long since pushed benchmark borrowing costs down to near zero, while swollen budgets provide little scope for stimulus.

But the latest batch of economic data out of Asia showed growth was not slowing quite as precipitously as many economists had feared. This bolsters the wait-and-see case, particularly when the biggest economic threat — Europe’s debt crisis — is so difficult to predict.

“The data still suggests that we’re losing momentum, but we’re not losing momentum in a rapid deterioration that requires immediate action,” said Claudio Piron, emerging Asia rates strategist with Bank of America-Merrill Lynch.

Take China’s fourth-quarter growth figures, for example. Although the year-on-year rise of 8.9 percent was the slowest since mid-2009, it was still a bit stronger than economists polled by Reuters had predicted.

In India, a measure of factory activity picked up far more than expected in December, alleviating fears that the economy was unraveling. Yet gross domestic product growth has slowed dramatically and is likely to worsen in the current quarter.

By Emily Kaiser, Asia Economics Correspondent

(Reuters) – China’s cooling property market could shave more than 2 percentage points off 2012 growth, forcing Beijing to decide just how badly it wants to keep the economy expanding at more than 8 percent a year.

Even if the world’s second-biggest economy avoids a housing crash, slower property investment is almost certain to constrain growth. That assumption was built into economists’ predictions that the economy will slow in 2012, but data released this week suggests housing may take an even bigger chunk out of growth.

China’s investment in real estate development rose 28 percent to 6.17 trillion yuan (635 billion pounds) in 2011 — a full $200 billion (130 billion pounds) more than the United States put into residential real estate at the peak of its housing bubble in 2005.

Unlike the United States, China does not have an oversupply of housing. In fact, the government has pledged to build 7 million units of public housing in 2012 after an estimated 10 million in 2011.

But in order for property investment to add to GDP growth, it has to keep getting even larger each year, and with real estate prices falling and developers scrounging for credit, China will be hard pressed to outdo 2011′s strong showing.

“If they build the same amount (in 2012) that they did last year, which is still a phenomenal rate of construction, then it would take GDP down to 6.6 percent,” said Patrick Chovanec, an economist who teaches at Tsinghua University’s School of Economics and Management in Beijing.