OECD inflation declines in June 2024 to lowest level since Oct 2021

The Organisation for Economic Co-operation and Development (OECD) has reported a decline in year-on-year (YoY) inflation, as measured by the Consumer Price Index (CPI), to 5.6 per cent in June 2024, down from 5.9 per cent in May. This marks the lowest level of inflation since October 2021, with a similar rate of 5.7 per cent observed multiple times since early 2024. Headline inflation decreased in 24 of the 38 OECD countries and fell below 2 per cent in nine countries, compared to six in May.

However, inflation remained above 5 per cent in Colombia and Iceland and exceeded 70 per cent in Turkiye. Excluding Türkiye, OECD inflation is estimated to have dropped to 2.9 per cent in June from 3.1 per cent in May.

OECD energy inflation also saw a decline, dropping to 2.3 per cent in June from 2.5 per cent in May, with reductions recorded in 24 countries. Significant disparities persist across OECD countries: energy prices increased by 10 per cent or more YoY in Turkiye, Colombia, Belgium, Chile, and Denmark, while they fell by over 10 per cent YoY in the UK, Sweden, Lithuania, and Norway. OECD core inflation, which excludes food and energy, fell below 6.0 per cent for the first time since March 2022, OECD said in a press release.

In the G7 countries, YoY headline inflation fell to 2.7 per cent in June from 2.9 per cent in May, the lowest level since March 2021. Notably, headline inflation dropped by 0.2 percentage points or more in the US, Canada, and Germany, while it remained largely stable in other G7 nations. YoY, energy prices continued to decline across the G7, with notable decreases in the UK and Italy (over 8.0 per cent), but increased in Japan, France, and slightly in Canada. Core inflation was the primary driver of headline inflation in all G7 countries, except Japan.

In the euro area, YoY inflation, measured by the harmonised index of consumer prices (HICP), remained steady at 2.5 per cent in June, compared to 2.6 per cent in May. Since October 2023, it has fluctuated between 2.4 per cent and 2.9 per cent. According to HICP, three euro area countries (Lithuania, Italy, and Finland) reported headline inflation at or below 1.0 per cent, while five others (Belgium, Spain, the Netherlands, Austria, and Portugal) saw rates at or above 3.0 per cent. Both core and energy inflation were stable YoY. Eurostat’s flash estimate for July 2024 indicated that YoY inflation in the euro area remained at 2.6 per cent, with unchanged core inflation, while energy inflation increased to 1.3 per cent from 0.2 per cent in June.

In the G20, YoY inflation decreased to 7 per cent in June from 7.3 per cent in May. Headline inflation fell in Argentina, although it remained above 270 per cent, and in Indonesia, but it rose in Brazil for the second consecutive month. Inflation was broadly stable in China, Saudi Arabia, and South Africa.

ALCHEMPro News Desk (DP)