UK now the only G7 country with rising inflation, OECD says

The UK is now the only country in the G7 group of rich nations still dealing with rising inflation, the Organisation for Economic Co-operation and Development (OECD) has said.

The Paris-based OECD – a club of 38 rich countries – said inflation in the UK rose to 7.9% in May, up from 7.8% in April, while among the countries of the G7 the rate slipped to 4.6%, down from 5.4%.

“Inflation declined in all G7 countries, apart from the United Kingdom, where inflation edged up, as core inflation continued to rise,” the OECD said.

Countries in the G7 club include the United States and Germany.

The OECD had previously said UK inflation will be higher in 2023 than nearly any G20 member save for Argentina and Turkey.

Across the 38 OECD countries, the average rate of inflation fell to 6.5% in May.

Among this group of nations, the UK was not alone – the rate of inflation in Norway and the Netherlands also grew.

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Inflation is measured by using a consumer price index of typical goods, and looking at how what they cost has changed.

The OECD’s consumer price index for the UK differs from that used by the Office for National Statistics (ONS). As a result, the 7.9% inflation figure recorded by the OECD for the UK in May differs from the official ONS figure of 8.7%.

The OECD measure includes the costs of owning and living in a home while the common UK consumer price index method of assessing price rises does not.

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Inflation has remained stubbornly high, despite the Bank of England consistently raising interest rates since December 2021.

The base interest rate was brought up to 5% last month as the Monetary Policy Committee of the bank attempts to dampen economic activity by making borrowing more expensive.

It hopes this will bring inflation down to a target of 2%.