June 2023 sees OECD inflation sharply decline to 5.7%

Energy inflation in the OECD continued downwards in June, reaching -9.6 per cent after -5.2 per cent in May. It was negative in 27 OECD countries, still it remained above 10 per cent in Hungary, Colombia, and the Czech Republic, the OECD said in a press release.

In June, the decline in OECD inflation less food and energy (core inflation) to 6.6 per cent from 6.9 per cent in May was slightly more pronounced than in previous months.

YoY inflation in the G7 fell to 3.9 per cent in June 2023 from 4.6 per cent in May. Inflation fell sharply (i.e. by more than 1.0 percentage point) in Italy following a pronounced decline in energy inflation and in the US where core inflation saw a marked decrease. Inflation also slowed but to a lesser extent in France, the UK, and Canada. By contrast, inflation rose in Germany to 6.4 per cent in June compared with 6.1 per cent in May, after 3 months of decline, driven by an uptick in core inflation and stable energy inflation. Part of this increase stems from a base effect from the 2022 relief measures.

In Japan, inflation has been broadly stable, hovering around 3.3 per cent since February 2023, while other G7 countries showed a downward trend over this period. Non-food and non-energy items were the main contributors to headline inflation in all G7 countries in June.

In the euro area, YoY inflation as measured by the Harmonised Index of Consumer Prices (HICP), fell to 5.5 per cent in June 2023, from 6.1 per cent in May.  Energy inflation and food inflation continued to decline, while core inflation increased slightly. Eurostat’s flash estimate for July 2023 points to a further decline in YoY inflation in the euro area to 5.3 per cent. Energy inflation in the euro area is estimated to have further declined in June while core inflation is estimated to have been stable.

In the G20, YoY inflation declined to 5.5 per cent in June 2023, from 5.9 per cent in May. In China, YoY inflation declined to zero, its lowest level since February 2021. Inflation decreased in South Africa, Brazil, Indonesia, and China, but increased in Argentina and India. It was stable in Saudi Arabia.

ALCHEMPro News Desk (NB)