INFLATION in the OECD area rose to 6.6% in the 12 months to December 2021, compared with 5.9% in November, and just 1.2% in December 2020, reaching its highest rate since July 1991. This increase was driven in part by a surge 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).

Energy prices soared by 25.6% in the OECD area in the 12 months to December 2021, two percentage points (p.p.) lower than November’s 27.6%, but high compared with 4.2% in December 2020. Food price inflation in the OECD area picked up strongly to 6.8% in December, compared with 5.5% in November and 3.2% in December 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 a number of large economies.

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