The Risk of Inflation has become a Global Challenge, IMF

Inflation has become a global challenge and a threat to economic stability, the IMF's Deputy Managing Director John Lipsky said. Inflation fueled by rising prices of both energy and commodities has become a major concern.

Demand for commodities in emerging economies, such as India and China, grew at a faster pace. Higher demand for oil by the developing nations pushed global oil prices to an all-time high.

In a speech to the Council on Foreign Relations, Mr. Lipsky identified the problem of lower interest rates and its influence on inflation. He also called on governments to step forward and encourage investment in the energy sector, reduction of biofuel subsidies, and improvement in agricultural policies. The IMF is also working to help developing nations who are worst affected by the commodities hikes, and to develop strategies that can be adopted by its member countries.

It is anticipated that the problem of inflation will soon be checked, aided by a slowdown in US economic growth and rising unemployment.