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Paulson, Darling Face `Stagflation' Risk on Oil Price Simon Kennedy June 16 (Bloomberg) -- Finance ministers from the world's richest nations face another week of inflation headlines after signaling concern that the global economy risks a dose of stagflation as commodity prices soar. Officials from the Group of Eight ended talks in Osaka, Japan, on June 14 by saying record fuel and food costs threaten to spur inflation. They also pose a ``serious challenge'' to growth, eclipsing the credit squeeze, the ministers said. ``Commodity prices have powered ahead of the financial crisis to become the number one priority of international policy makers,'' said Marco Annunziata, chief economist at Unicredit Markets and Investment Banking in London. ``Stagflation is clearly the underlying, unspoken concern.''
(Article continues below) After acknowledging policy making is ``more complicated,'' the ministers' apprehension about an inflation outbreak may mount this week. Economists forecast reports to show consumer prices last month rose the most since 1997 in the U.K., while U.S. producer prices are predicted to have gained 1 percent from April. The inflation rate in the euro area rose to 3.7 percent last month, the highest since June 1992, the European Union's statistics office said today. The G-8 officials didn't propose any new policies, apart from promising to take ``appropriate actions.'' They repeated their call of the past four years for producers to pump more crude and consumers to use it more efficiently.
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