OECD tracks deflation risk around the world

UK inflation rates are out of kilter with equivalent indices in other major economies, new analysis from the Organisation for Economic Co-operation and Development (OECD) has confirmed.

The organisation compared the Consumer Price Index (CPI) - a standard measure of annual price rises - over the year to July for countries around the world.

It highlighted the fact that both the US and Japan experienced negative price rises of over two per cent over the 12-month period.

Meanwhile, prices were either flat or slightly negative in the three major eurozone economies of Germany, France and Italy.

However, CPI in the UK for July stood at 1.8 per cent.

Falling prices retain the capability of lengthening and deepening economic downturns, as they deter people from spending large amounts on goods and services.

Instead, consumers and businesses can delay their purchases in the hope that prices will fall further.

Despite these differing price trends, the economies of Germany, France and Japan were all observed to have grown over the second quarter of 2009.

By contrast, UK GDP shrunk by 0.8 per cent over the period.ADNFCR-2318-ID-19342203-ADNFCR