While several international institutions and economists still see inflation as a major threat to the region, Don Hanna, Citigroup head economist for emerging markets, said he believed markets have already seen the worst of inflation.

'The (price) adjustment has been done,' Mr Hanna said at a client event in Singapore.

Citi global chief economist Lewis Alexander added the bank was confident oil supply will catch up with demand, noting Opec and other oil producers had raised production faster than the rise in demand over the past two years.

Food prices may also fall as major producing nations such as the United States reverse decade-old policies aimed at restricting the output of wheat and other grains to boost farmers' incomes, he added.

For example, Citi expects Chinese economic planners to shift their focus to growth from inflation sometime this year as price pressures were likely to moderate soon, according to its report published last week. It also said Singapore, Indonesia and Korea were in a position to loosen fiscal policy to boost growth.

The price of crude oil fell below $90 (S$128) a barrel on Monday, down from $100 at the start of the year, as falling stock markets spurred profit taking.

Food prices remain high although Nestle Chief Executive Peter Brabeck said on Saturday he expected lower food price inflation this year compared with 2007.

Food accounts for a higher share of the consumer price index in most Asian countries than in industrialised nations, making the region more vulnerable to changing prices of grains and meat compared with North America and Europe. -- REUTERS