Inflation to remain higher for two years, warns OECD

Inflation to remain higher for two years, warns OECD

Prices in the G20 group of major economies will grow faster than pre-pandemic for at least two years, a leading global agency has forecast.

Higher commodity prices and shipping costs are pushing up inflation, Paris-based policy forum the OECD said.

The UK is expected to have inflation running at about 3% at the end of 2022, the highest rate of the advanced economies, the OECD said.

By contrast, inflation is expected to fall in the US, France, and Germany.

Inflation has picked up around the world due to higher costs of raw materials, constraints on the supply of goods, stronger consumer demand as economies reopen, and prices bouncing back from drops during the pandemic in some sectors, it said.

A sharp rebound in consumer demand coupled with supply disruptions and depleted stores of goods have pushed up prices and shipping costs around the world.

 

Persistent supply shortages could lead to a longer period of higher inflation, the OECD said.

The OECD expects the rate of inflation in the G20 to moderate from 4.5% at the end of 2021 to 3.5% by the end of 2022.

However, the OECD said that "sizeable uncertainty remains" about this forecast.


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