Chart of the day: Oil price hikes in Asian countries

Oil prices in Singapore rose by 12% in February compared to a year ago, tracking a weak trend in Asia.

According to Morgan Stanley Research, oil prices have already spiked up to US$126/bbl, partly due to geopolitical concerns. Moreover, other commodity prices such as the CRB metals index have risen by 11% YTD.

“We are concerned that the further monetary easing by DM central banks, which we are expecting to be carried out in the next few months, could add to the upward pressures on commodity prices. Should this rise in commodity prices be sustained, we could see more upside to our inflation forecasts for 2012,” it said.

Morgan Stanley also notes that weaker exchange rates provide less protection against imported inflation.

“The exchange rates for the region excluding China are now at weaker levels as compared to Feb-11, when oil prices were also rapidly rising. Indeed, oil prices in local currency terms are now about 14% higher than their Feb-11 levels, indicating that price pressures are more intense now,” it said.