by Liu Lina
WASHINGTON, March 20 (Xinhua) -- Two and half years ago when Wall Street giant Leman Brothers collapsed after the housing bubble burst in the United States, pundits predicted that inflation would be one of the ensuing risks facing the world economy.
Now this concern has become a reality.
Led by food and energy costs, rising prices are felt all around the world, especially for the emerging markets and developing economies. Consumer Prices Index in Brazil hit 5.91 percent in 2010, the highest level in six years. Russia's inflation reached 8.8 percent last year while India just increased its inflation expectation for March from 5.5 percent to 7 percent.
Even advanced economies in Europe also witnessed increasing prices. According to European Union statistics, the inflation rate in the Euro area rose to 2.4 percent, the highest level since October 2008.
World Bank Group President Robert B. Zoellick has warned recently that rising food prices are at dangerous level.
Global food prices are "threatening tens of millions of poor people around the world," Zoellick said, "Now food security is a global security issue."
According to data released by the Washington-based international financial institution, rising food prices have driven an estimated 44 million people into poverty in developing countries since last June as food costs continue to rise to near 2008 levels.
The latest edition of Food Price Watch, a research publication by the World Bank, showed that food price index rose by 15 percent between October 2010 and January 2011, is 29 percent above its level a year earlier, and is only 3 percent below its 2008 peak.
In a recent briefing, the International Monetary Fund's spokeswoman Caroline Atkinson said the Fund was "extremely concerned" with rising food prices.
Steady rises in the global rising food prices may continue, and will have far-reaching impact, especially on the poor, cautioned IMF economists Thomas Helbling and Shaun Roache in a Finance & Development (F&D) magazine article released Friday.
Oil prices have spiked since January, rising as investors worry that unrest in the Middle East and North Africa could hurt global supply. More recently, the mega earthquake and tsunami that struck Japan, the world's third largest economy, have added new variables to the global inflation challenge.
As many countries are trying hard to fight inflation pressure, the U.S. economy seems an exception.
Data released on March 17 showed that the U.S. Consumer Price Index (CPI), which tracks inflation at the retail level, increased 0.5 percent in February.
Over the past 12 months, the index rose by 2.1 percent before seasonal adjustment. Excluding the volatile food and energy categories, the so-called "core" index rose only 1.1 in February on a yearly basis. It remains below the Federal Reserve's preferred range of 1.5 percent to 2 percent.
In a report sent to the Congress late February, the White House Council of Economic Advisors said that the U.S. economy has the great potential to grow without inflation. The report also predicted that CPI index in the U.S. would only increase 1.4 percent in 2011.
"I neither worry about inflation, nor worry about deflation," Robert Shapiro, former presidential economic advisor and Sonecon Chairman told Xinhua. "The key challenges for the U.S. economy are to expand growth and create more jobs."