OECD: Rich country inflation slips to 3.1%

Inflation in advanced economies eased to 3.1 percent in the 12 months to the end of June from 3.2 percent to the end of May as a rise in energy prices slowed, the OECD said on Tuesday. This was the first slowing of inflation in OECD countries since November 2010, the Organisation for Economic Cooperation and Development said. In June, energy prices rose 13.6 percent, down from 14.2 percent in May but food was up 4.0 percent after a gain of 3.9 percent in May. Inflation was steady in the United States at 3.6 percent and in Germany at 2.3 percent but in Japan it fell to 0.2 percent from 0.3 percent. For the 17 countries in the eurozone, the figure was steady at 2.7 percent. Inflation in China, which is not a member of the OECD, accelerated to 6.4 percent from 5.5 percent to set the highest figure since June 2008. In Canada inflation slowed to 3.1 percent from 3.7 percent and in Britain to 4.2 percent from 4.5 percent. In June compared with May, prices in the OECD area fell by 0.1 percent. The highest 12-month inflation figure for the member countries listed by the OECD was 6.2 percent in Turkey, unchanged from the figure for May. The lowest figure was the 0.2 percent in Japan. In advanced economies, inflation of 2.0 percent or more is considered to generate anticipation of further inflation, causing a so-called second-round of inflationary pressures which can snowball. But inflation of less than 1.0 percent is considered to signal that the economy could be slipping dangerously close to deflation which can also snowball into recession.