OECD inflation falls to 1.4%, crimped by energy prices

Weak energy prices pushed down inflation in advanced countries to 1.4 percent in February from 1.7 percent in January, the OECD said on Tuesday against a background of concern that eurozone inflation is too low. In the eurozone, inflation "slowed to 0.7 percent in February, compared with 0.8 percent in January," the OECD said. Referring to the overall figures, it said that "this slowdown in the annual rate of inflation was driven by energy prices which fell by 0.4 percent in the year to February compared with an increase of 2.1 percent in the year to January." However, food price inflation rose slightly to 1.6 percent from 1.5 percent in January. If the price of food and energy were excluded, inflation was steady at 1.6 percent for the fourth month in a row. There is concern that disinflation in many advanced countries is coming worryingly close to deflation, an absolute fall in prices, which can set in train a vicious circle of falling demand, rising unemployment, weak growth and further price falls. Economists are waiting to see if the European Central Bank takes action at its meeting this week to prevent prices in the eurozone from falling further. The ECB sets its price stability target at inflation of close to, but just under, 2.0 percent. The OECD, a policy forum for advanced democracies, said that inflation in the United States fell sharply to 1.1 percent in February from 1.6 percent in January and in Canada to 1.1 percent from 1.5 percent. In Japan, however, inflation edged up to 1.5 percent from 1.4 percent. In eurozone Italy it fell to 0.5 percent from 0.7 percent, and in Britain, not a member of the eurozone, to 1.7 percent from 1.9 percent, in both cases the lowest rates since October 2009. In the eurozone, in Germany the rate fell to 1.2 percent from 1.3 percent, but in France it rose to 0.9 percent from 0.7 percent. Meanwhile, in the Russian Federation, with no connection to the eurozone, inflation rose to 6.2 percent from  6.1 percent.