Core inflation stays high, defying headline decline

Headline inflation eased to start 2024, yet core inflation remained stubbornly higher, according to the Organisation for Economic Cooperation and Development (OECD).

The annual headline inflation rate dropped to 5.7% in January from 6.0% at the end of 2023, the Paris-based group reported.

Headline inflation declined in two-thirds of countries that belong to the OECD, and was below 3% in 14 countries, up from 11 countries in December 2023.

Despite the downward momentum in headline prices, core inflation — excluding the volatile food and energy components — was 6.6% in January, down a tick from 6.7% in December.

Core inflation has now been higher than headline inflation for the past nine months, the OECD said, and energy inflation has been negative since May 2023.

For the G7, the annual headline inflation rate declined to 2.9% in January, down from 3.2% in December 2023, “reaching its lowest level since April 2021,” the OECD noted.

Headline inflation declined throughout the G7 except for Italy, where the rate rose slightly but remained the lowest in G7, the OECD said.

As with the OECD overall, while headline inflation eased, core inflation in the G7 was stable in January.

“Non-food and non-energy items were the main contributors to headline inflation in most G7 countries in January,” it said.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.