Food prices in the world's richest countries rose at the slowest pace in February since before Russia's invasion of Ukraine, according to figures showing inflation pressures easing on household budgets.
The Organization for Economic Co-operation and Development (OECD) announced that food inflation in its 38 member countries has fallen for the 15th consecutive month, from 6.3% in January to 5.3% in February.
The OECD said its consumer price index, an overall measure of inflation, remained stable at 5.7% despite declines in three-quarters of member countries.
According to the report, the worst monthly declines were in Poland and Sweden, while inflation remained below 2% in seven OECD countries and remained negative in Costa Rica.
However, Turkey was one of the countries that suffered from a rapid rise in food inflation, mainly related to higher import costs due to the depreciation of the local currency.
The fall in the value of the lira currency also meant a sharp rise in energy prices, a problem that also affected Colombia, a new member of the OECD.
The OECD has 38 members, including the United Kingdom, the United States, most major European countries, Mexico, Chile, and Israel.
Food and non-alcoholic drink prices in the UK were slightly below the OECD average, rising 5% in the year to February. This rate of increase was the lowest since the start of 2022 and below the 45-year high of 19.2% set in March 2023.
The OECD core inflation rate, which excludes food and energy prices, continued to decline, but remained high at 6.4%, reflecting persistently high service prices.
Inflation fell more sharply in the euro area and the United States, where energy and food price growth slowed dramatically.
The harmonized index of consumer prices in the euro area, used to compare inflation across countries, fell to 2.6% in February from 2.8% in January.
Analysts expect the central bank to cut interest rates multiple times this year in response to falling inflation, but have become more cautious about the scope of cuts in recent weeks.
Wage growth remains high in many countries, including the UK, and Brent oil prices are rising towards $90 (£71) per barrel, raising fuel costs for consumers.
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Nomura economist Andrzej Szczepaniak said he did not expect eurozone services inflation to fall enough for policymakers to start cutting interest rates by the June meeting of the European Central Bank.
“We think inflationary pressures in services are likely to remain slightly elevated over the medium term due to structurally declining labor supply and increasing demand in labor-intensive service sectors,” he said. added.
Szczepaniak said cross-currents from lower food inflation were confusing policymakers while service costs continued to rise.
“The analysis presented at the ECB's Expert Forecaster Research Conference shows that disagreement over the medium-term path of euro area inflation is at an all-time high,” he said.
According to the OECD, year-on-year inflation in G20 countries such as Saudi Arabia and Brazil rose from 6.4% in January to 6.9% in February, the highest level since March 2023.
“This increase was driven in part by a rise in China's headline inflation rate, which turned positive for the first time since August 2023. Headline inflation also rose in Saudi Arabia and Indonesia, and rose further in Argentina.” It was broadly stable in Brazil and South Africa,” the OECD added.
