G-10's Trichet Warns Of Global Inflation

Basel, Switzerland (AHN) - The economies still may be affected due to the significant upward risks to inflation worldwide as the global economy continues to grow, European Central Bank President Jean-Claude Trichet said Monday.

Trichet, who also chaired a meeting of central bankers from the Group of 10 industralized nations on Monday, indicated that higher commodity prices along with rising crude oil rates can deepen the inflation risks that is alread affected by food prices.

"On a global level, inflationary risks are significant," Trichet was quoted saying by The Wall Street Journal on Monday.

"There is no time for complacency for central banks in any respect," he said, adding that "the present level of inflation must be transitory."

Food prices all over the world have increased by 57 percent in March compared to a year earlier, according to the report by the United Nations.

"Food prices are an issue everywhere for two reasons: First, the impact on inflation, and second, the impact on the situation of many poor people around the world," Erkki Liikanen, a member of the European Central Bank governing council, told Journal.

"It is a challenging situation for developing nations," he said.

Some of the factors causing the crisis include rising demand of food produces, global warming, poor harvests and increasing conversion of agricultural lands to biofuel production.

While, the major rice producers like Thailand, Vietnam and India have put restrictions on exports to secure domestic supply.

Crude oil prices have risen as much as 119 a barrel last month, pushing up the gasoline prices in the U.S. by more than $3 per gallon.

"We had indications that markets were going better, but still we had the observation of tensions on the money markets," Trichet was quoted saying by Bloomberg.

"[There's] no time for complacency in any respect for central banks."