The Asian Development Bank said Wednesday controlling inflation was the region's "top priority" as strong growth, turmoil in the Middle East and Japan's nuclear crisis drive up food and oil prices.
The Manila-based lender warned some developing economies were showing signs of "potential overheating" and said more flexible exchange rates and capital controls could help curb soaring consumer costs and ease pressure on the poor.
Inflation was likely to hit 5.3 percent this year compared with 4.4 percent in 2010 due to unrest in the oil-rich Middle East and the nuclear disaster in Japan triggered by the massive March 11 earthquake and tsunami, the ADB said.
"Although inflation is still generally low, regional policy-makers need to make pre-emptive management of inflation a top priority," the ADB said in its 2011 Asian Development Outlook.
"Inflation pressures are building and preemptive measures may well be needed to avoid overheating."
It warned higher oil and food prices could "shake developing Asia's macroeconomic stability" and cause widening income inequality and "potentially lead to social tension".
Food costs across the region hit record highs in February, the ADB said.
Crude prices surged to two-and-a-half-year highs on Monday with Brent crude topping $120 a barrel for the first time since Augus
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