OECD inflation falls to 4% in May, lowest since June 2021
While the pace of OECD headline inflation has moderated, average price levels across the OECD continue to rise at almost twice the 2019 average rate and were 33.7 per cent higher than in December 2019, as per the latest data by OECD, as per the Statistical release by OECD.
Prior to this period, it took around 14 years—from July 2005 to late 2019—for prices to increase by a similar magnitude. Between April and May 2025, headline inflation fell in 15 OECD countries, with Turkiye, Netherlands and Lithuania seeing the largest decreases (more than 0.5 pp).
Year-on-year inflation in the OECD fell to 4 per cent in May 2025, its lowest since June 2021. Despite easing inflation, average prices remain 33.7 per cent above December 2019 levels. Core inflation dropped to 4.4 per cent, with declines in most member countries. G7 inflation held at 2.4 per cent, while euro area inflation eased to 1.9 per cent. G20 inflation dipped to 3.9 per cent.
By contrast, it increased in 9 OECD countries, with rises of 0.5 pp or more in Czechia, Greece, Mexico, and Norway. Headline inflation was stable or broadly stable in the remaining 14 countries.
YoY core inflation in the OECD fell to 4.4 per cent in May from 4.6 per cent in April, with decreases in 24 OECD countries and rises in only 5 countries, while it remained stable or broadly stable in the remaining 9 countries.
YoY inflation in the G7 remained stable in May, holding at 2.4 per cent for the third consecutive month. Inflation was stable or broadly stable in all countries except in Italy, where headline inflation slowed due to a 0.3 pp fall in core inflation and a decrease in energy prices.
Across the G7 countries, core inflation remained the primary driver of headline inflation, except in Japan, where the combined contribution of food and energy inflation exceeded that of core inflation.
In the euro area, YoY inflation as measured by the Harmonised Index of Consumer Prices (HICP) fell to 1.9 per cent in May, from 2.2 per cent in April. This decline was driven by a slowdown in core inflation to 2.3 per cent in May, its lowest level since January 2022, including a 0.8 pp decline of services inflation.
YoY headline inflation in the euro area remained broadly stable at 2 per cent, with a slowing decline in energy prices, while core inflation is estimated to have remained stable, according to Eurostat's flash estimate.
In the G20, YoY inflation fell to 3.9 per cent in May from 4.1 per cent in April. Headline inflation declined in Brazil and Indonesia, while it remained stable or broadly stable in China, India, Saudi Arabia, and South Africa. In Argentina, inflation continued to decline, reaching 43.5 per cent—6 times lower than a year earlier.
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