Even the slowdown in growth over the second half of last year has thus taken off the pressure only temporarily. In Hong Kong, after all, prices still rose over 6per cent in January compared to the previous year. There are no gaping output gaps here.

Even a slight acceleration in demand, therefore, will lead to a rapid response in consumer price index readings. In fact, research shows that the trade-off between growth and inflation has deteriorated in Asia over the past decade. This means that, for a given level of growth, inflation is now higher than, say, six or seven years ago.

Crucially, however, this also implies that, for a given acceleration of growth, inflation snaps back more quickly today than we've become accustomed to.

The reasons for this are structural. Demographics are becoming slowly, but perceptibly, more challenging. This puts upward pressure on wage costs.

But other factors are playing a role, too. The shift from export-led to domestic-demand- focused growth is inherently inflationary. Crudely, it is easier to scale up the export of widgets than it is to expand the provision of services or construction in the local economy.

Also, despite all the hype about Asia's massive investment spending, it is not clear that this has really raised the productive potential of the region's economies as much as is often assumed: a big chunk of what is counted as investment relates to property construction - not exactly the stuff that makes an economy hugely more productive.

With Asia wound tight like a coil, the liquidity pouring into the region could quickly push up price pressures.

We are not discounting the financial risks that still hover menacingly above Europe and the world financial system. But, global central banks, from the Bank of England, the European Central Bank, all the way to the Bank of Japan, are evidently determined to keep all ships afloat. The trouble is that the outcome of such policy is binary.

It either fails, and worries about Asian inflation would clearly be misplaced, or it succeeds, in which case price pressures across the region will quickly resurface. Hong Kong stands at the door of all that in-rushing global liquidity.

Oil is already perking up. Perhaps, rising crude prices are not an imminent threat to inflation. Base effects will still be favourable through the middle of the second quarter across the region.

But, the oil rally may have legs. Three factors appear to be behind it. First, geopolitics. Iran foremost, but Sudan and Syria aren't helping either. It's hard to see a quick fix here. Second, liquidity. More money in the world and a weaker US dollar, and, presto, oil goes pop. We've seen this before, and liquidity may not tighten any time soon. Third, demand. Asian crudes are trading at a premium to Brent and inventories are low. As Asia picks up, and it now consumes more than anyone else, more of the black stuff will be needed.

Hong Kong is in a particular bind. Ample liquidity, rising wages and costlier oil will push up price pressures again over the coming year. But, the trouble is that we are already starting from a high base. Despite cooling demand in recent months, prices are still rising briskly. Inflation could therefore become more pronounced over the coming year.

There is little the administration can do but to offer targeted relief to hard-hit consumers and try to throttle overall growth. Fortunately, that's a better problem to have than the abyss that the world economy was staring into only a few short months ago.

Frederic Neumann is co-head of Asian economics research at HSBC