OECD warns oil prices are driving inflation

Consumer prices rose 3 per cent in the year to end-January in the OECD countries, largely due to costly energy, the Organisation…

Consumer prices rose 3 per cent in the year to end-January in the OECD countries, largely due to costly energy, the Organisation for Economic Cooperation and Development said today.

Energy prices were up 16.7 per cent, and food prices rose 1.9 per cent in the 30 OECD countries, which represent roughly 60 per cent of world economic output.

The January increase followed a tamer December, when prices on a monthly basis did not rise, leaving year-on-year inflation at 2.7 per cent.

In November, prices had actually retreated. Inflation for the grouping as a whole rose 1.8 per cent year-on-year once volatile energy and food prices were stripped out of the calculation, the OECD said.

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The year-on-year rise in overall prices was 4 per cent in the United States, where energy prices were up 24.8 per cent in the year to end-January.

Euro zone consumer prices, measured according to harmonised methods, were up 2.4 per cent as a whole on a year-on-year basis, with energy prices up 13.6 per cent, food up 1.7 per cent. The rise stripping out food and energy was just 1.2 per cent.

In Japan, where markets expect the central bank shortly to end years of ultra-loose monetary policy that was used to fight deflation, the annual rise in consumer prices was 0.5 per cent, with energy up 5.8 per cent and food prices flat. Prices rose 0.2 per cent year-on-year once food and energy were discounted.

In Britain, the overall year-on-year rise was 2.4 per cent, while in Switzerland a jump of 1.3 per cent masked a 0.9 per cent drop in food prices, which kept the underlying rise to 0.4 per cent year-on-year, well below the average.