Jean-Claude Trichet, the European Central Bank President, today gave warning about the future inflationary risks of soaring food prices across the world and explained that financial market speculators may also be to blame for the rising cost of grains and dairy produce.

Speaking at meetings of central bankers hosted by the Bank for International Settlements in Basel, Mr Trichet summed up the talks by claiming that: "food prices [are] one of the issues we mentioned constantly. 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.”

Other central bankers warned that using interest rates to grapple with inflation were not suitable tools to cope with the rising cost of food.

Economists expect that the European Central Bank will begin to cut the cost of borrowing in the third quarter of this year, lagging moves by the US and the UK. Currently, interest rates in the Eurozone ecoonomies stand at 4 per cent.

Kevin Logan, senior economist at Dresdner Kleinwort, in New York said: "We expect the Eurozone to slow quite a lot this year. Because of the strength of the Euro, they have been less affected by rising oil prices, so they are not facing as great inflationary pressures as the US, but they still face the same issues with food. Food shortages are real and the effects show up in Europe just as much as the US and the UK."

Mr Logan expects Eurozone economic growth - which hit 2.8 per cent in 2007 - to slow to 1.5 per cent duing this year, with "the real slowdown happening in the third quarter".

At the same group of meetings, China’s central bank governor, Zhou Xiaochuan, said he expected little impact on the country’s exports from slower growth in the United States, the world’s biggest economy.

He explained: "The US may import a little bit less from China. We could see this phenomenon but not very significantly. Basically China exports still grow quite strongly,” referring to export growth to Asia and Europe.

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