Annual inflation in OECD countries up to 4.3% amid higher energy, food prices

ANNUAL in ation across some of the world’s largest economies increased to 4.3 per cent in August, driven by rising energy and food prices, according to the Organisation of Economic Co-operation and Development.

The rise in prices in August, up 0.1 per cent from July, continued an upward trend that began in December 2020, with energy prices in the 37-member economic bloc rising at a faster pace of 18 per cent, after the 17.4 per cent rate recorded in July.

“Food price in ation also increased sharply to 3.6 per cent, compared with 3.1 per cent in July,” the OECD said.

“Excluding food and energy, OECD annual in ation remained stable at 3.1 per cent for the third consecutive month.”

While central banks and governments across the globe have pumped 25 trillion into their economies to cushion the effects of the Covid-19 pandemic, the ow of money has raised fears about rising in ation, with easing coronavirus restrictions, staff shortages and supply chain challenges worsening the outlook.

Concerns around stag ation a situation in which the in ation rate is high and economic growth stalls - are also ramping up amid higher energy costs, said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

“With price increases slamming economies from all directions, concerns about stag ation seem to have turned from niggling worries to an anxiety attack. As many businesses grapple with labour shortages and an continuing supply chain crisis amid higher demand for goods, there are concerns that higher costs will drag on the overall economic recovery,” Streeter said.

“Central bankers could be forgiven for experiencing a big dose of vertigo as they balance on the tricky tightrope of trying to keep a lid on in ation, while attempting to keep monetary stimulus loose enough not to choke off growth.”

In the euro area, annual in ation picked up strongly to 3 per cent in August 2021, from 2.2 per cent in July, but remained lower than in the OECD area as a whole, particularly compared with the US, where annual in ation stood at 5.3 per cent for the same period, slightly down from 5.4 per cent in July.

“Excluding food and energy, euro area in ation jumped to 1.6 per cent compared with 0.7 per cent in July largely reecting increase in the price of non-energy industrial goods, in particular the prices of clothing and footwear,” the OECD said.