Record oil prices risk stoking inflation and stunting economic growth in Asian economies, officials said. ``Rising oil prices will affect Japan's economy,'' Economic and Fiscal Policy Minister Hiroko Ota said today in Tokyo. High energy costs are contributing to inflationary pressure, the Bank of Korea said. Rising prices may limit the ability of central banks to ease borrowing costs, just as economic growth cools in the U.S., the biggest market for most of Asia's export-dependent economies. The International Monetary Fund this week cut its forecast for U.S. economic growth this year, as a two-year housing recession contributes to the weakest expansion since 2002. ``If we see prices persist at these levels, obviously it will stimulate inflationary pressures in the region,'' Subir Gokarn, Asia-Pacific chief economist at Standard & Poor's said yesterday. ``It will also perhaps increase the risk of China and India slowing down.'' Crude oil for November delivery reached $90.02 a barrel on the New York Mercantile Exchange, the highest price since trading began in 1983. It was at $89.52 at 10:45 a.m. in Singapore. http://www.bloomberg.com/apps/news?pid=20601087&sid=apRJLaxFrURg&refer=home
I'm under the impression that though oil prices are at record highs in US dollar terms, if you look at it in terms of most other currencies they are actually still under their highs back in 2006. Oil is till up of course, but it seem to me that this will affect the US more than Japan in relative terms.