OECD inflation declines for 3rd consecutive month in November

This downward trend in inflation was observed in 28 OECD countries, mirroring the decline pattern seen between September and October. However, the report noted that the rate of decline in headline inflation was less pronounced compared to the previous month. In contrast, countries such as the Netherlands, Denmark, and Belgium experienced a resurgence in headline inflation after a period of falling rates.

A key component of the report highlighted the ongoing decrease in core inflation, which excludes volatile items like food and energy. Core inflation in the OECD dipped from 6.5 per cent in October to 6.3 per cent in November, marking its lowest point since April 2022, OECD said in a media release.

In terms of food inflation, the OECD witnessed a continual slowdown, reaching 6.7 per cent in November, down from 7.4 per cent in October. This decline was recorded in 34 OECD countries. Interestingly, November 2023 marked the seventh month of negative energy inflation within the OECD, though this trend varied significantly across member countries. For instance, Czechia and Colombia saw energy inflation exceed 20 per cent year-on-year, while Belgium, the Netherlands, Italy, and Denmark experienced over 20 per cent declines in energy prices year-on-year.

Focusing on the G7 nations, year-on-year inflation decreased to 3.1 per cent in November, a drop from 3.4 per cent in October. Notably, Canada and the United States saw unchanged headline inflation rates, while other G7 countries, especially Italy, reported significant declines. The primary drivers of inflation in most G7 countries were non-food and non-energy items.

The Euro area also showed a declining trend in inflation, as indicated by the harmonised index of consumer prices (HICP). The inflation rate fell to 2.4 per cent in November from 2.9 per cent in October, with notable declines in food and core inflation, but a less significant drop in energy inflation. However, Eurostat's flash estimate for December indicated a potential rise in euro area inflation to 2.9 per cent, primarily due to a slowing decline in energy prices and continued decrease in core inflation. Germany, in particular, is estimated to have experienced a significant inflation increase in December, influenced by a base effect related to a one-off measure on gas and heating bills in December 2022.

In the G20, the overall year-on-year inflation rate remained relatively stable at 5.8 per cent in November, compared to 5.7 per cent in October. While inflation decreased in South Africa and China, with China entering further into negative territory, increases were noted in Argentina, India, and Indonesia. The rates remained broadly stable in Brazil and Saudi Arabia.

This comprehensive analysis by the OECD highlights the complex and varied landscape of global inflation, underscoring the divergent economic paths and challenges faced by countries within the OECD, G7, and G20.

Fibre2Fashion News Desk (KD)