Central bankers sound alarm over food prices

By Krista Hughes and Dominic Lau

BASEL, Switzerland (Reuters) - Soaring food prices are helping to push up inflation all around the world, central bankers said on Monday, urging more market competition and free trade to even out prices.

With food prices rising by more than 40 percent in the last year, the issue was high on the agenda at meetings at the Bank for International Settlements in Basel which began on Sunday.

European Central Bank President Jean-Claude Trichet, who chairs the Monday morning global economy session, said all countries, without exception, were affected by significant inflation risks stemming from rises in food, energy and other commodity prices.

Another issue was ongoing tensions in money markets, although there had been recent signs of improvement in equity prices and an easing of perceived credit risk generally.

"Food prices (are) one of the issues we mentioned constantly," Trichet said in summing up the talks. "It is an additional element adding to the energy prices, to the metal prices and a number of commodity prices and that is really at a global level a very important phenomenon."

Central banks urged open and competitive markets to try to tackle price rises, which in the case of food were driven by rising living standards in developing countries, climate change and possibly also speculation, he said.

Other policymakers speaking on the sidelines of the meetings said traditional monetary policy tools -- such as interest rates -- were not suitable to tackle food price inflation.

"Food pressures could be one of the most serious problems that we have to face now," said Polish National Bank President Slawomir Skrzypek.