As world leaders meet more frequently than ever on surging oil and food prices, no magic bullet has yet been found to shoot down the price hikes, leaving major economies across the world worrying about their growth prospect and national well-beings.
Europe is facing a "very strong inflationary shock" as a result of rising energy and food costs, EU Commissioner for Economic and Monetary Affairs Joaquin Almunia said on Monday.
He said that higher inflation was emerging as "a big punishment to the weakest sectors of society," because "it eats away the purchasing power of people who have seen their incomes stagnate in recent years."
His remarks came as the European Commission revised its forecast higher for inflation this year, to 3.2 percent from 2.1 percent in 2007, well above the target of just under 2 percent that the European Central Bank aims at.
Figures showed that the euro zone economic growth decelerated from 2.6 percent year-on-year in the third quarter of 2007 to 2.2 percent in the last quarter, which owed much to a weakening of private consumption due to surging prices of necessities like energy and food.
While in the United States, people who have already felt the pinch of an economic slowdown after the credit crunch now have to tighten their belt as prices go up.
According to a report by the Herald Tribune on Monday, middle- and working-class U.S. consumers started to switch from name brands to cheaper alternatives, to eat at home instead of dining out and to fly at unusual hours to reduce travel expenditures.
The report cited a longtime retail consultant Burt Flickinger as saying that he had seen similar significant changes in consumer buying patterns in the late 1970s, when rampant inflation prompted Americans to "switch from red meat to pork to poultry to pasta - then to peanut butter and jelly."
The U.S. Consumer Confidence Index has fallen to a 26-year low in April, standing at 62.6, the lowest since April 1982, when the "stagflationary" period of low growth and high inflation was still an issue for many Americans.
Like its southern neighbor, Canada also said it is facing harder times ahead. Canada's Central Bank revised its forecast of GDP growth from a January prediction of 1.8 percent to only 1.4 percent on April 24, citing soaring gasoline prices and high cost of food as main factors of the downturn.