"It is imperative to remove supply side constraints and export restrictions, replace general food subsidies in developing countries with well-targeted help for the poorest," G-8 finance ministers said in a statement after meeting today in Osaka, Japan.
Governments in Asia, where about 600 million people survive on less than $1 a day, have been divided between the need to rein in surging prices and to shore up growth. The G-8 today said price rises have "severely hit many low-income importing countries" and that they expect demand to stay high.
Price controls on food and fuel have long been policy tools in nations with large populations living in poverty, including India and Indonesia.
Reducing support for energy prices would also help the struggle against climate change by sending a "price signal" to reduce consumption.
Still, rising energy and commodities prices are increasing the subsidy bill and putting pressure on national budgets, forcing the region's governments to pass on the costs of gasoline, grains and even poultry to consumers.
"There is growing concern on part of the G-8 about the impact of rising food and energy prices," said UK Chancellor of the Exchequer Alistair Darling.
"Particularly in relation to food, this is something governments can solve."
Indonesia's President Susilo Bambang Yudhoyono, facing elections in 2009, raised fuel prices in May for the first time in almost three years. The government would have to spend 190 trillion rupiah ($20 billion) on subsidies if fuel prices were not increased, the government said.
Southeast Asia's largest economy may also stop subsidising makers of soybean-based food products next year and end a policy that helps poor families to buy cooking oil.
