2 September 2008, 16:01  OECD: Inflation should ease

Inflation should ease if oil and other commodity prices stabilise as they appear to be doing, the OECD said on Tuesday, but the extent to which consumer morale and demand improves after a long run of price rises is less sure. "If commodity prices are sustained at their recent, and in cases such as oil, lower levels, some moderation of both headline and underlying inflation is to be expected," the Organisation for Economic Cooperation and Development said in a statement. It also predicted weak economic growth in the industrialised world in the next few months. OECD Chief economist Jorgen Elmeskov said the spike in oil prices, compounded by accelerated food price rises for much of the past year, had hit household confidence hard and there was now hope of more stable food and fuel prices. "It remains unclear if the recent price fall will have the opposite effect, i.e. boost consumer confidence," he told a news conference . In an earlier interview with Reuters, Elmeskov said it remained to be seen whether households had fully adjusted expenditure to higher costs and lower disposable incomes during the second quarter or if the demand-depressing process had yet to run its course.

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