G8 should tackle food, fuel prices: EU ministers

By Jan Strupczewski and Marcin Grajewski

LUXEMBOURG (Reuters) - Soaring prices at Europe's supermarkets and petrol stations require a coordinated response by the world's top eight economies rather than fiscal or monetary policy changes, EU finance ministers said on Tuesday.

They also said they would look at ways to curb speculation in food and oil, which played a role in the surge in prices.

The chairman of euro zone finance ministers, Luxembourg Prime Minister Jean-Claude Juncker, said he had asked for food and fuel prices to be discussed during the summit of European Union leaders on June 19-20 and at a global level.

"I do think we have to address these issues at G7 and G8 level," he told reporters, echoing the words of EU Economic and Monetary Affairs Commissioner Joaquin Almunia.

The Group of Eight countries are the United States, Canada, Japan, Russia, Germany, France, Italy and Britain.

Dozens of world leaders met in Rome on Tuesday to discuss the wider food crisis, emergency humanitarian aid needs and perhaps longer-term challenges.

Prices of many food commodities have doubled in the last two years and are likely to remain high for the next decade even if they retreat from recent records, according to the OECD and the U.N. Food and Agriculture Organisation.

Inflation is running at a record 3.6 percent in the euro zone, which also risks a sharp economic slowdown.

Food costs rose twice as fast as broader prices in the EU in April, the EU statistics office said, with milk, cheese and eggs surging. Transport fuels cost 12 percent more in April than a year ago, sparking protests across the European Union by truckers and fishermen demanding tax cuts on fuel.

Facing pressure from such protests, French President Nicolas Sarkozy proposed to cap the sales tax on fuel if oil prices continued to rise, a move that got short shrift from others in the EU who fear starting a tax-cutting competition.

Juncker said Sarkozy's idea deserved discussion even if most did not support it. "The French president raised a serious issue and we have to further discuss the issue," he said.

FIGHTING SPECULATION

Juncker said speculation was a major factor behind the rises in food and oil prices and that it needed to be fought.

"There are different possibilities we have to examine, this chapter is not closed. We have to be more vigilant on this aspect of the problem and we have to act," he said.

He also said higher taxes on oil companies were among the options being considered by the ministers.