Inflation across the OECD remained broadly unchanged at 4.1 per cent in July, despite diverging trends among member economies as higher energy costs continued to put pressure on prices.
Year-on-year consumer price inflation was little changed from June, with increases in headline inflation in 13 OECD countries broadly offset by declines in 14. Rates remained broadly stable in a further 11 countries.
Energy inflation remained particularly elevated, holding at 11.6 per cent and staying above 10 per cent for a fourth consecutive month. Core inflation, which excludes food and energy, was also broadly unchanged at 3.6 per cent.
Food prices provided some relief. Food inflation fell in 23 OECD countries during July, including declines of at least 2 percentage points in Greece, Hungary and Latvia. Across the OECD, food inflation fell to 3.2 per cent from 3.4 per cent in June.
UK energy costs push inflation higher
The divergence was particularly pronounced in the Group of Seven, where headline inflation remained stable at 3 per cent in July despite increases in most member economies.
Italy and the US recorded broadly stable inflation, offsetting rises elsewhere. G7 energy inflation, however, accelerated to 12.2 per cent from 11.8 per cent in June.
Germany recorded the sharpest increase in energy inflation, which jumped by 5 percentage points following the end of its fuel discount scheme on June 30.
The UK saw the second-largest increase, with energy inflation rising by 4.1 percentage points after the latest increase in the domestic energy price cap.
Japan was the only G7 economy where energy inflation remained well below 10 per cent. Even there, however, energy inflation turned positive for the first time since November 2025.
The figures underline the extent to which the renewed increase in energy costs is complicating the inflation outlook for advanced economies, even as underlying price pressures remain considerably more contained.
Eurozone inflation accelerates
Inflation in the euro area also moved higher in July. Headline inflation, measured by the Harmonised Index of Consumer Prices, rose to 3 per cent year-on-year from 2.8 per cent in June.
The increase was driven primarily by higher energy inflation, which more than offset a 0.4 percentage point decline in food inflation. Core inflation remained broadly stable at 2.5 per cent.
Eurostat’s flash estimate for August points to a further acceleration, with headline inflation in the 21-member euro area rising to 3.2 per cent.
Energy inflation is expected to have climbed sharply to 14.3 per cent, while core inflation remained broadly stable.
The figures suggest that the recent increase in energy costs is beginning to feed more visibly into headline inflation across Europe, potentially complicating central banks’ efforts to bring price growth back towards target.
China bucks the trend
The broader G20 picture was more benign. Headline inflation fell to 3.9 per cent in July from 4.1 per cent in June.
China recorded one of the sharpest declines, with headline inflation halving to 0.5 per cent in July.
Inflation also fell in Brazil, India, Indonesia and South Africa, while Argentina recorded an increase and Saudi Arabia was broadly unchanged.
The contrast between subdued inflation in several emerging economies and renewed energy-driven pressure in advanced economies highlights the increasingly uneven global inflation landscape.
For policymakers, the persistence of elevated energy inflation remains a key risk. While food and underlying price pressures have generally moderated, a sustained rise in energy costs could delay the broader return to low and stable inflation.
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