OECD inflation surges 8.8% in March as rampant energy costs bite

Increase is steepest since October 1988 with one in five member countries recording double-digit inflation

Inflation in the Organisation for Economic Co-operation and Development area surged 8.8 per cent in March 2022, compared to the same month last year, as energy prices continue to rise.

The equivalent rise in the 38-member countries of the organisation was only 2.4 per cent in March 2021.

The latest rise is also a whole percentage point higher than the year-on-year rise of 7.8 per cent recorded in the area in February.

About one fifth of OECD countries recorded double-digit inflation, with the highest rate being in Turkey, at 61.1 per cent.

The jump is the highest in the OECD area since October 1988, a rise which was caused high oil prices and tight monetary policy in countries such as the US, Canada, West Germany, Italy, the UK and Japan.

This time, rising energy prices have been the main driver.

In the OECD they soared 33.7 per cent year-on-year in March ― the highest rate since May 1980 ― up from 26.6 per cent in February.

Excluding food and energy, year-on-year inflation increased to 5.9 per cent in March, after a 5.6 per cent jump in February 2022.

Year-on-year inflation in the G20 area also increased in March 2022, reaching 7.9 per cent compared with 6.8 per cent in February 2022.

In all G7 countries, year-on-year inflation rose to an overall rate of 7.1 per cent in March.

The largest increase in inflation among G7 countries was recorded in Germany (+2.1 percentage points) and the smallest increase was recorded in Japan (+0.3 percentage point).

Energy was the biggest contributor to inflation in France, Germany and Italy, while inflation excluding food and energy was the main driver of overall inflation in Canada, the UK and the US.

In the Euro area, overall inflation as measured by the Harmonised Index of Consumer Prices (HICP) rose to 7.4 per cent in March 2022, compared with 5.9 per cent in February 2022.

Excluding food and energy, inflation in the Euro area increased to 2.9 per cent in March, compared with 2.7 per cent in February.

Eurostat’s flash estimate for the euro area in April 2022 points to an increase in year-on-year inflation and inflation excluding food and energy to 7.5 per cent and 3.5 per cent respectively.