Year-on-year inflation in the OECD, as measured by the Consumer Price Index (CPI), fell to 7.7 % in March 2023, down from 8.8 % in February 2023 and from the 10.7 % peak in October 2022 (Figures 1 and 3). Returning to its February 2022 level, the decline in inflation was broad-based, with inflation between February and March 2023 moderating in 34 of the 38 OECD countries. At the low end, Japan, Luxembourg, Spain and Switzerland recorded inflation rates below 4 %, while inflation in Hungary and Türkiye still exceeded 20 %.
Energy inflation in the OECD dropped sharply to 1.3 % in March 2023, down from 11.9 % in February. This fall largely reflects the strong increase in the consumer price index for energy in March 2022 (i.e. base effect). Energy inflation declined in 36 of the 38 OECD countries and was even negative in 13 countries in year-on-year terms. However, this story was not universal, with energy inflation remaining above 20 % in six countries. Meanwhile, food inflation in the OECD tapered for the fourth consecutive month, down to 14.0 % from 14.9 % in February. OECD inflation less food and energy remained broadly stable at 7.2 %.
Year-on-year inflation in the G7 slowed further to 5.4 % in March 2023, down from 6.4 % in February, with a broad-based decline across all seven countries. Italy recorded the most significant drop, reflecting a sharp decrease in energy inflation. In Canada, Japan and the United States, negative contributions from energy prices helped to tame headline inflation. Food and energy inflation remained the main contributors to headline inflation in Italy, while inflation excluding food and energy served as the main driver in Canada, Germany, the United Kingdom and the United States. In France and Japan, both components contributed almost equally to headline inflation (Figure 2).
In the Euro Area, year-on-year inflation, as measured by the Harmonised Index of Consumer Prices (HICP), fell to 6.9 % in March 2023, from 8.5 % in February. Energy prices declined by 0.9 percentage point in March. Food inflation and inflation less food less energy increased slightly. Eurostat’s flash estimate for April 2023 points to a slight increase in year-on-year inflation in the euro area, to 7.0 %, as the estimated rise in energy inflation was partially compensated by a slight decline in inflation less food and energy.
In the G20, year-on-year inflation fell to 6.9 % in March 2023, from 8.0 % in February. Outside the OECD, inflation decreased in Brazil, China, India, Indonesia and Saudi Arabia, but increased in Argentina. It was broadly stable in South Africa.
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