OECD predicts rising food prices

Central banks must carefully monitor inflation and prepare to act if there are effects, warned yesterday Mathias Cormann, secretary general of the Organization for Economic Co-operation and Development (OECD).

“Our (Economic) Outlook indicates that the increase in energy and fertilizer prices could cause increases in food prices, which would especially affect vulnerable households,” he warned.

During the presentation of the analysis, he explained that the energy supply crisis caused by the conflict in the Middle East is putting the world economy to the test and “inflation will increase considerably.”

He detailed that the inflation expectation has been revised upwards between one and two percentage points for the group of the 20 most developed economies in the world (G-20) as a whole and three points or more for 14 G-20 countries, and this is due to higher energy prices and pressures on supply chains.

“Average inflation in the G20 is now projected to reach 4 percent this year and moderate to 2.7 percent next.”

He warned that any measure to cushion the impact of the energy crisis must be specific, temporary and take into account the limited fiscal margin available to most governments.

“Any policy adopted to mitigate the impact of energy prices must target the most vulnerable population, be temporary in nature, and ensure that incentives for energy savings are maintained,” he commented.