MercoPress. South Atlantic News Agency

World central bankers warn of rising food prices and inflation

European Central Bank President Jean- Claude Trichet, who chaired a meeting of central bankers of the world's leading nations warned on Monday about rising food prices and significant inflationary risks.

"Inflation risks are significant" because of the increase in commodity prices, "a very important phenomenon at global level" said Trichet at a press conference in Basel, Switzerland. He added that world growth is ongoing "but somewhat lower than in the previous year". Economic growth in emerging markets such as China, India and Russia has increased demand for commodities, pushing up inflation. Worldwide, food prices in March were 57% higher than a year earlier, according to the United Nations, and oil prices hit a record 120 US dollars a barrel this month. Trichet admitted indications of better working markets but "tension remains" on money markets and there's "no time for complacency in any respect for central banks". The central banks of the US, Euro region, UK, Switzerland and Canada started a concerted program of cash auctions in December to revive lending as the credit shortage threatened to undermine economic growth. Trichet said the increase in food prices was "one of the issues we mentioned constantly" in addition to inflation risks stemming from the rise in other commodity prices. "We as central banks are calling for as competitive as possible markets, both in our own economies and at a global level; we trust that highly competitive markets and open economies are playing against inflation. It is true for food as for other products and services". Last month the International Monetary Fund estimated that inflation in advanced economies would accelerate to 2.6% from 2.2% in 2007. IMF also cut its global growth forecast for this year to 3.7% from 4.1%. Food and agricultural product inflation was "perceived in all economies without exception" Trichet said adding that "from that standpoint, the anchoring of inflation expectations in line with price stability is very important in all countries". Trichet said the price of some staple foods has tripled this year, but the rising cost of food has nothing to do with speculators, "it is a simple case of demand outweighing supply. I don't think there was any sense that speculation was at the source of what we were observing". Regarding economic growth central bankers at the meeting observed that it was the emerging markets who were keeping the global economy growing. "Growth at a global level ... will remain significant despite the slowing down that is observed in a number of industrial economies" said Mr. Trichet said. And this "thanks to the remarkable confirmed resilience of emerging economies we see ongoing growth at a global level, even if it is growth that is somewhat lower than in the previous period".