The Jump in Energy Price Inflation

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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.