KUALA LUMPUR, June 15: Inflation in Asia will hit 5.1 per cent in 2008 due to surging food and fuel prices and may threaten economic growth in the region, according to the Asian Development Bank.

“Our projection for inflation for Asia for 2008 is 5.1 per cent, which is already a 10-year high,” Rajat M. Nag, managing director-general of ADB told reporters at a two-day World Economic Forum on East Asia meeting here on Sunday.

“This was a projection we did in April. We are revising our projections. My feeling is the projections will go even higher,” he added.

Mr Nag said Asian monetary and fiscal authorities should “recognise inflation as a very major concern” and hinted that they should raise interest rates.

Inflation “can endanger growth in Asia,” he said, adding that “central banks should take all steps, including looking at rates as what India has done quite appropriately.”

India’s central bank on Wednesday raised a key short-term borrowing rate by a quarter percentage point to 8 per cent to battle inflation that analysts say might be headed to double-digit levels.

Mr Nag said if Asian economies “do not tamper the inflationary rate which is quite high, you actually will compromise growth. So it is precisely to sustain the prosperity of Asia that we need to focus on inflation,” he said.

“Asia has had a very good growth story. We need to focus on inflationary pressure, otherwise the growth story will be endangered,” he warned.—AFP