The Jump in Energy Price Inflation

Jul. 1.08 | About: Energy Select (XLE)

The impact of higher energy and food costs on inflation is clearly illustrated in the OECD’s latest statistics.

Prices for energy in OECD countries were up by 14.6% year-on-year in May, compared with a 12.4% annual rate in April, as higher oil prices worked their way through to consumers. The annual rate of energy inflation was 26.5% in Belgium, 25.5% in Iceland, 19.8% in Luxembourg and 17.2% in the US.

Annual consumer price inflation for food edged up to 6.1% compared with 5.7% in April.

Food price inflation was highest in Turkey (15.7%), Iceland (15.3%), Hungary (14.0%) and the Czech Republic (10.6%).

However, excluding food and energy, consumer prices rose by 2.1% in the year to May, compared with 2.0% in April.

The higher energy prices pushed the overal consumer prices in the OECD area to an annual rate of 3.9% in the year to May 2008, compared with 3.5% in the year to April 2008. This constitutes the highest inflation rate since June 2001. On a monthly basis, the price level rose by 0.7% in May, compared with 0.5% in April.

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