Oil and food prices top G8's list of international concerns
July 9, 2008
Toyako, Japan - Rising oil and food costs posed a "serious challenge" to the global economy, leaders of the Group of Eight (G8) said yesterday, indicating that inflation had become their primary concern.
"We have strong concerns about the sharp rise in oil prices," they said in a statement in Toyako, Japan, at the annual G8 summit. "The world economy is now facing uncertainty and downside risks persist."
The impact of rising oil prices, which reached an unprecedented $145.85 (R1 130) a barrel last Thursday, are rippling through the global economy by sapping household budgets and boosting production costs.
The high cost of oil added urgency to G8 discussions on climate change, said Canadian Prime Minister Stephen Harper.
In those talks, the group agreed to set a target to cut their greenhouse gas emissions by at least half by 2050. The statement left each country to pursue its own path in tackling pollution and embraced a call by US President George W Bush that countries such as China and India be included in any climate accord.
Yesterday's statement suggested inflation concern had mounted since G8 finance ministers met in Osaka last month, when thy said rising commodity prices "may" increase inflationary pressure.
The document echoed comments on Monday by finance ministers from the 15-nation euro area endorsing last week's quarter-point interest rate increase by the European Central Bank to 4.25 percent.
Record maize, wheat and rice prices have further contributed to accelerating inflation, which the International Monetary Fund predicts will this year be the fastest in advanced economies since 1995, even with growth at the slowest in seven years.
"They have clearly signalled that public enemy number one is inflation," said John Kirton, the director of the G8 research group at the University of Toronto.
To ease oil market pressure, several leaders proposed holding a forum between energy producers and consumers to focus on energy efficiency.
Addressing the rising cost of food, the G8 said countries with sufficient food stocks needed to make available some of their supply to tame the increase.
The G8 leaders reaffirmed their target of doubling aid to Africa as part of a $50 billion increase in development assistance to poorer nations.
Meanwhile, the EU would channel e1 billion (R12 billion) in unused European farm subsidies to African farmers as part of its response to the global food crisis, Jose Manuel Barroso, the European Commission president, said on Monday.
Barroso said: "The EU really can give a boost to agriculture in developing countries."
The EU executive has previously outlined its intention of taking up to e1 billion of unspent farm subsidies between now and the end of next year and using the money for a fund for seeds, fertilisers and other agriculture projects in Africa.
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