Price rises plague euro zone 10th birthday meeting

ECB chief Jean-Claude Trichet set the tone on the eve of the gathering, saying central banks dropped their guard on inflation at huge cost to the economy and jobs during the oil crisis of the 1970s.

"The poor response to the (1970s) oil crisis caused a huge slowdown in economic growth and we paid a very high price for the error," Trichet said in an interview with the French news website Mediapart.

That was when mass unemployment took hold too, he said.

The finance ministers of the 15 countries in the euro zone were to hold talks on the state of the economy in the morning, before the ECB birthday party celebrations, also attended by central bankers and guests including German leader Angela Merkel.

"Inflation is the greatest concern right now," one official said of the meeting agenda for the ministers.

After a week when fishermen protested and blocked ports in Europe over a fresh spurt in diesel prices, politicians are feeling the heat.

French President Nicolas Sarkozy said last week the European Union as a whole should consider capping value-added sales tax on fuel products if prices kept rising.

Jean-Claude Juncker, Luxembourg prime minister and chairman of meetings of euro zone finance ministers, said the suggestion jarred with EU policy but that France had a right to have it debated by the ministers if it so wished.

"I think that this idea goes against the general spirit," he said in an interview on French radio ahead of the meeting in Frankfurt, Germany's financial capital.

Finance ministers agreed a few years ago that no EU country should break ranks with major tax cuts to ease the pain of high fuel costs, partly because they fear that this plays into the hands of oil producing countries.

The trouble is Europe, like the rest of the world, is being hit by soaring prices for food as well, which is an even bigger part of household budgets.

Dozens of leaders are meeting this week in Rome to discuss the global food crisis amid warnings that millions more will go hungry.

The price of many food commodities has doubled in the last two years and is likely to remain high for the next decade even if they retreat from recent records, according to the OECD and the U.N. Food and Agriculture Organization.

Inflation in the euro zone, which also risks a quite sharp economic slowdown in the months ahead, is running at a record 3.6 percent.