Britain has been singled out as currently the least successful country in the G7 at curbing inflation and one of the three worst in the wider 38-nation Organisation for Economic Co-operation and Development.
In its latest snapshot of inflation around the developed world, the organisation said that in the UK it picked up speed from 7.8 per cent in April to 7.9 per cent in May. That compared with an average reduction in inflation from 5.4 per cent to 4.6 per cent in the seven-nation club, which includes the United States, Japan and Germany.
Among the 38 rich nations in the OECD, Britain was also an outlier, with only the Netherlands and Norway also recording an acceleration in prices in May. In a commentary, the Paris-based OECD said: “Inflation declined in all G7 countries, apart from the United Kingdom, where inflation edged up, as core inflation continued to rise.”
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The organisation’s national consumer price index for the UK includes the costs of owning and living in a home and is its most comprehensive measure of inflation.
It differs slightly from the preferred measure of inflation used by the Bank of England, the consumer prices index, which was running at an annual 8.7 per cent in May, unchanged from April.
The Bank has lifted the base rate 13 consecutive times to 5 per cent since December 2021 as it scrambles to contain stubbornly high inflation. Originally due to soaring fuel and food prices, inflation has crept into wage rises, raising concerns of a wage/price spiral.
Markets will be closely watching the next official inflation figures for the UK for June, due on July 19, amid speculation that the Bank of England will have to raise the base rate further. It has an inflation target of 2 per cent.
While responsibility for price stability rests with the Bank, Rishi Sunak at the start of the year made halving inflation from the then 10.7 per cent one of his five targets for the year.
Challenged by MPs on the parliamentary liaison committee yesterday over whether this target would now be met, Sunak said he would “leave that to the forecasters”, while acknowledging it could prove difficult.
Across all OECD nations, inflation currently ranges from less than 3 per cent in Costa Rica, Greece and Denmark to more than 20 per cent in Hungary and Turkey.