There are some signs that prices have started to creep up across the region. China's annual consumer inflation rebounded from 33-month lows to 2 percent in November, while data from Thailand and Indonesia show inflation edged higher in December.
High inflation in India meanwhile dogged the country's central bank last year and prevented it from cutting interest rates aggressively to boost a flagging economy. India's wholesale price index, the main measure of inflation, rose 7.24 percent in November from a year earlier.
(Read More: Can't Abandon Inflation Agenda, Says India's Central Banker)
Xie said that lower-than-average economic growth across Asia has so far helped keep inflation at bay. However, with growth and wages expected to pick up slightly in 2013 and 2014, higher prices could become a problem.
"I think next year, we will see trouble," Xie said, adding that for the time being inflation was still under control as wage rises were still low.
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The World Bank raised its 2013 economic growth forecasts for China and developing East Asia in December. Developing East Asia could expand 7.9 percent, up from an earlier forecast of 7.6 percent, the bank said. This is higher than the 7.2 percent growth expected for 2012.
Hong Kong, Singapore Home Prices to Halve?
A consequence of rising prices will be an inevitable hike in interest rates by the U.S. Federal Reserve as well as central banks in Asia. This may finally burst a property bubble that's been fuelled by low interest rates in cities such as Singapore and Hong Kong, Xie said.
"The Fed has basically outlined a 2.5 percent inflation limit and so when inflation rises above that, they have to explain why they are not raising interest rates," Xie said.
If This Happens, Singapore Home Prices Will Fall
"In Hong Kong and Singapore, the issue is very much about interest rates. So it's going to be similar to 1998," he added, referring to the property bubble that burst at the peak of the Asian financial crisis.
House prices in the two cities could plunge by half if interest rates go up, he added.
Private home prices in Singapore have risen 56 percent since 2007 and most analysts expect this upward trajectory to continue into the New Year, citing record low benchmark rates for home loans.
In Hong Kong, house prices climbed by about 20 percent in 2012, after gaining 60 percent over the past decade. This was also driven by record low mortgage rates and an inflow of foreign money.