High commodity prices are threatening growth and increasing inflationary pressures, the Group of Eight nations will say after their meeting on Saturday, a source from the rich nations club said on Friday. “For a long time the world economy enjoyed a combination of robust growth and low inflation, but it now faces headwinds,” the G-8 draft said, according to the source. “Elevated commodity prices, especially of oil and food, pose a serious challenge to stable growth worldwide...(and) may increase global inflationary pressures.” The G-8 will also express concerns about the sharp rise in the price of oil, the source said. Finance ministers from the world's leading industrialized powers grappled Friday with runaway crude oil prices and a global food crisis that they fear could threaten economic growth worldwide. Ministers from the G-8 club huddled here to discuss ways to limit the damage sparked by a doubling of food costs in three years and skyrocketing oil prices. The G-8 will this weekend warn that high oil and food prices pose serious risks to global economic growth, a G-8 source said. “Elevated commodity prices, especially of oil and food, pose serious challenges to a stable growth worldwide, have serious implications for the most vulnerable and may increase global inflationary pressures,” according to a draft version of the G8 joint statement. “These conditions make our policy choices more complicated,” it adds, according to the source, who asked not to be named. “We will remain vigilant and will continue to take appropriate actions, individually and collectively, in order to secure stability and growth in our economies and globally,” the draft says. The G-8 was also expected to call for increased investment by energy-producing nations to boost their oil production capacity so as to help rein in prices. Rising commodity prices have stoked inflation in many countries, raising more fears for the world economy, and come as the United States battles a sharp slowdown sparked by a housing sector slump and related global credit crunch. International Monetary Fund head Dominique Strauss-Kahn said on the sidelines of the meeting in Osaka in western Japan that the worst of the credit crisis appeared over, but he warned inflation was a serious problem. “We have good reason to think that the financial crisis is mostly behind us but it's too soon to say” for sure, he told reporters Friday, adding that the IMF thought a proper economic recovery was unlikely until 2009. Officials have also warned that curbing oil prices is no easy task, with the G-8 powers possessing few obvious options to cool the commodity boom quickly. French Finance Minister Christine Lagarde said the G8 needed harder information about the cause of recent wild swings in crude prices. “I find it hard to understand the erratic volatility in oil prices” in recent days, she told reporters Friday before the ministers began a series of bilateral talks ahead of their formal meeting Saturday. Producers insist there is no shortage of oil, blaming speculators and the weak dollar. But analysts say they could still do more to douse speculative froth that helped to push oil prices to nearly $140 per barrel. Japanese Finance Minister Fukushiro Nukaga said the ministers had to be on alert about the global economy given the threats it faced, even though US financial markets were becoming more stable. “We need to be very vigilant about the future economic situation,” Nukaga told reporters after meeting US Treasury Secretary Henry Paulson for one-on-one talks, adding they had also discussed currencies but declining to give details. The meeting on Friday and Saturday gathers the top finance officials from Britain, Canada, France, Germany, Italy, Japan, Russia and the US. It is also focused on the food crisis and efforts to tackle climate change, including a proposed fund for technology to combat global warming.
