G8 leaders aim to tackle global inflation

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Euro zone July inflation hits record 4.1%Singapore inflation holds at 26-yr highInflation out of control in some countries: IMFInflation out of control in some countries: IMF

Tokyo, July 4:: to what governments can do now," a Japanese government source said on condition of anonymity.

"It is important to reach a global consensus on what's happening in the global economy, but the summit cannot always trumpet action plans."

Tatsuo Kageyama, analyst at Kanetsu Asset Management, said oil prices would stay high partly due to speculative money flowing into the oil market and the perception that demand will remain strong in the long run while supplies are tight.

"I don't think G8 leaders can calm down this market. The market doesn't have high hopes for a turnaround in the market."

TENSION OVER WEAK DOLLAR

Helped by surging oil and commodity prices, food security has muscled its way onto the summit agenda. The World Bank estimates up to 105 million people could become poor due to rising food costs.

Koji Tsuruoka, director-general for global issues at Japan's foreign ministry, said the G8 leaders are likely to issue a separate statement on food prices. The statement will probably call on governments to release available food stockpiles or reserves to global markets and seek steps to boosts agricultural output in developing countries, he said.

As the G8 summit approaches, some countries blame a weaker dollar for pushing up oil prices. As the US currency declines, it costs more to buy oil and gold in dollar terms, and thus, a weaker dollar can exacerbate rises in commodity prices.

Against this backdrop, the United States is increasingly finding itself having to defend its economic policy to foreign leaders who are battling inflation.

The G8 leaders could discuss the dollar as one factor behind surging oil prices, a Japanese foreign ministry official said.