France says oil price rise has not hit growth

French Finance Minister Mr Nicolas Sarkozy said today the hike in oil prices was a worrying issue but said the rise in costs …

French Finance Minister Mr Nicolas Sarkozy said today the hike in oil prices was a worrying issue but said the rise in costs had not damaged a pick-up in economic growth.

"It is a subject of worry," Mr Sarkozy told reporters in the southwestern town of Arcachon, referring to the new surge of crude oil future prices to 14-year highs.

"But the price of raw materials has not damaged the return of growth," he added.

Oil prices have surged by more than a third since the end of 2003 on worries that accelerating global demand has left supplies tightly stretched with little leeway for disruption.

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IPE Brent crude futures touched $40.45 today, the highest since October 1990, after the head of OPEC said the producers' cartel had no extra oil to hand.

Mr Sarkozy's comments come after recent investment and consumer spending data in France bolstered optimism about the speed of the recovery in the euro zone's second largest economy.

Several government ministers said last week that growth could reach 2.5 per cent this year.