The price of energy rises at the fastest rate seen since 1981 in developed countries

OECD inflation increased to 6.6% year-on-year in December 2021, compared with 5.9% in November and 1.2% in December 2020, reaching its highest rate since July 1991. This inflation record is produced mainly by the increase in energy prices, whose price is rising at the highest rate in the last 40 years.

It is also true, as revealed by the OECD, that this increase was driven in part by the large increase in annual inflation in Turkey (to 36.1% in December, after 21.3% in November). Excluding Turkey, inflation in the OECD area increased more moderately (to 5.6%, after 5.3% in November).

The price of energy skyrockets

Energy prices soared 25.6% in the OECD area in the 12 months to December 2021, down two percentage points (pp) from November’s 27.6%, but high compared to 4 .2% in December 2020. OECD food price inflation rebounded strongly to 6.8% in December, compared with 5.5% in November and 3.2% in December 2020. 2020.

Excluding food and energy, OECD year-on-year inflation also rose sharply, to 4.6%, compared with 3.9% in November, and contributed significantly to headline inflation in several large economies.

Inflation in 2021

For 2021 as a whole, annual inflation in the OECD rose to 4.0%, compared to 1.4% in 2020, the highest average annual rate since 2000. Energy prices increased by 15.4%, the highest rate since 1981. By comparison, they had fallen 6.5% in 2020. Excluding food and energy, annual inflation rose to 2.9%, compared to 1.8% in 2020.

In December, year-on-year inflation increased moderately in most G7 countries compared to November. It increased 0.2 percentage point in the United States (to 7.0%, from 6.8% in November), the United Kingdom (to 4.8%, from 4.6%), Italy (to 3.9%, from 3.7%) and Japan (from 0.6% to 0.8%), and just 0.1 percentage points in Germany1 (from 5.2% to 5.3%) and Canada (from 4.8% , 4.7%). It remained stable in France (at 2.8%).

Inflation without food and energy was the main contributor to headline inflation in the US, UK, Germany and Canada, where it contributed 4.7, 3.5, 3.0 and 2.6 pp, respectively. However, energy made a significant contribution to headline inflation in all G7 countries, ranging from 1.2pp in the UK to 1.8pp in the US, and was the main contributor to headline inflation in France. .

Although food price inflation increased in all G7 countries, its contribution to headline inflation remained limited, ranging from 0.2pp in France to 0.7pp in Canada.