A resurgence in worldwide inflation in the past several months has been principally powered by rises in the price of food and energy, exacerbated by galloping demand in fast-growing emerging markets, reports AFP.

While grain prices have exploded, crude oil is now above 100 dollars a barrel, trends that weigh heavily on nearly all the world’s economies and on consumer purchasing power.

The price rises reflect potent demand in emerging market nations, where surging economic momentum requires more and more basic commodities to meet production targets and to satisfy desires of better paid workers and consumers.

Worldwide supply, hampered by constraints on resources and production capacities, is struggling to meet growing demand, sparking tension on international markets and a rise in prices.

Inflation records are beginning to be set around the world, slashing hard-won household purchasing power. Price-induced friction is particularly acute in the developing world, where families must now allocate most of their earnings just to buy food and fuel. Violent, and sometimes deadly, demonstrations have broken out in several African nations against the rising cost of living.

The World Bank has warned that sharply higher import bills could expose 33 countries to political and social unrest. “We need a new eeal for global food policy,” World Bank president Robert Zoellick said in a recent speech to a Washington think tank.

Zoellick urged countries to provide the minimum 500 million dollars immediately sought by the World Food Programme (WFP) to face the mounting food crisis. But developed nations, themselves threatened by inflation, have but limited room to manoeuvre.

The head of the European Central Bank, Jean-Claude Trichet, has said that price stability is critical for the poorest and most vulnerable residents of the 15-nation eurozone.

The ECB has been pursuing a tight monetary policy, declining to lower interest rates because of the threat of inflationary pressure. But the institution must also grapple with slowing eurozone growth in the current atmosphere of international financial market instability.

Higher prices can erode consumer spending, one of the motors of economic growth, and can trigger a reduction in savings. In addition governments face growing agitation for higher wages from strapped workers, pressure that can in turn intensify inflation threats.

In general, significant inflation complicates planning by individuals, business and governments because of the extra difficulty in judging future values and risk.

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