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• International oil prices increased further amidst continued unrest in the Middle East
• Food prices reached new record highs, pushing up inflation worldwide
• As this went to press, a devastating earthquake in Japan occurred, causing the loss of thousands of human lives and huge economic damages

Ministers of Finance and Central Bank Governors of the G20 met in Paris on 18 and 19 February in preparation for the April G20 summit. Recently, differences of approach have been surfacing between G20 members on central issues, such as the re-emergence of global imbalances, escalations in prices of commodities and fiscal and private sector balances. The meeting succeeded in ironing out divergences by postponing concrete coordinating strategies while calling for studies aimed at setting guidelines for policy action, to be enunciated at the April meeting.

 

As G20 ministers expressed concern at the continuing rise of food and commodity prices, the FAO food price index increased to new record highs in February. Over the last eight months, the index rose 40 per cent and is situated 5 per cent above the peak of June 2008. The index for cereals rose by 68 per cent over the same period and is only 7 per cent below its historic peak of 2008. The sharp price rises are particularly challenging for developing countries with high food import ratios.